Annual Report - Part 1

Centamin Egypt Limited 22 September 2006 CENTAMIN EGYPT LIMITED ABN 86 007 700 352 Annual Report 30 June 2006 ANNUAL REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2006 COMPANY PARTICULARS DIRECTORS Mr Sami El-Raghy Chairman Mr Josef El-Raghy Managing Director/CEO Mr Colin Cowden Non Executive Director Mr G Brian Speechly Non Executive Director Dr Thomas Elder Non Executive Director Mr H Stuart Bottomley Non Executive Director COMPANY SECRETARY FINANCE MANAGER Mrs Heidi Brown Mr Mark Smith PROJECT MANAGER GENERAL MANAGER - EGYPT Mr Wayne Foote Mr Youssef El-Raghy SENIOR EXPLORATION GEOLOGIST SENIOR MINE GEOLOGIST - SUKARI Mr Roger Speers Mr Richard Osman HEAD OFFICE EGYPT OFFICE 57 Kishorn Road 361 El-Horia Road Mount Pleasant WA 6153 Sidi Gaber Australia Alexandria, Egypt Telephone: + 61 8 9316 2640 Telephone: + 203 5411 259 Facsimile: + 61 8 9316 2650 Facsimile: + 203 5226 350 Email: centamin@centamin.com.au Email: pgm@centamin.com.au Website: www.centamin.com BANKERS Australia Egypt National Australia Bank Limited MISR International Bank 50 St George's Terrace 54 Elbatal Ahmed Abdel Aziz Street Perth WA 6000 Cairo, Egypt AUDITORS Australia Egypt Deloitte Touche Tohmatsu Mostafa Shawki & Co Level 14, Woodside Plaza 78 Abdel Salam Aref St 240 St Georges Terrace Borg El Salam - Glym Perth WA 6000 PO Box 360, Sidi Gaber, Alexandria 21411, Egypt UNITED KINGDOM NOMINATED BROKER & ADVISOR Evolution Securities Limited 100 Wood Street London EC2V 7AN United Kingdom LOCATION OF REGISTERS OF SECURITIES Australia United Kingdom Advanced Share Registry Services Computershare Investor Services 110 Stirling Highway PO Box 82 The Pavilions, Bridgwater Road Nedlands WA 6909 Bristol BS99 7NH England Telephone: + 61 8 9389 8033 Telephone: + 44 0870 702 0003 Facsimile: + 61 8 9389 7871 Facsimile: + 44 0870 703 6116 STOCK EXCHANGES The Company is listed on the Australian Stock Exchange and the Alternative Investment Market of the London Stock Exchange. The Home Exchange is Perth. CHAIRMAN'S REPORT Dear Shareholders It is my pleasure to present to you the annual report of the Company for the year ended 30 June 2006. What a difference a year makes! This time last year I was pleased to announce that 'we are finally back doing what we do best' and what a year it has been. On the 12th May 2005 we recommenced drilling at Sukari and at that time the reported mineral resource estimate for the project was 2.94 million ounces of gold. As announced just recently, the current mineral resource estimate now contains 6.79 million ounces of gold, an increase of 3.85 million ounces or of 131% in just over one year and we are still drilling. There are currently nine drill rigs drilling on site being operated primarily by Egyptian drillers, under the supervision of the drilling contractor. This is a tremendous advancement to have a core of experienced local drillers that will ensure long term benefits for both the Company and the drillers themselves. Great progress has also been made with infrastructure at the Sukari camp, with construction of more accommodation and staff facilities including cafeteria and social amenities. Construction is being carried out by the Company's staff, using local materials and is aesthetically in keeping with traditional Egyptian architecture. Because of their participation in the construction, the workers are very proud of their camp and take great care in the maintenance of the facilities. The feasibility study to a bankable standard for the development of a 4 million tonne per annum processing plant continued during the year, albeit at a pace that has been frustrating. Unfortunately resource projects in the current climate are experiencing strong demand for professional technical services and capital items, which in turn is resulting in significant escalation of project time lines and costs. As such the Company is considering the purchase of used process plant items in an effort to reduce both the procurement time and the cost. We have identified a recently closed operation that contains most of the process plant items that your Company will require for the Sukari project. The potential purchase of this plant represents an opportunity to materially reduce the cost of development and also accelerate the construction timetable. Testing of the structural integrity of key plant items has been completed and negotiations with the plant owner are at an advanced stage. By necessity, the completion of the study will be delayed whilst a thorough review of this process plant is carried out. I am pleased to say that your Company has enjoyed marvellous support from the Minister for Petroleum and Mineral Resources, His Excellency Sameh Fahmy and the staff at the Ministry. The Minister and his entourage visited Sukari twice during the past year, resulting in tremendous media coverage throughout Egypt which in turn has sparked greater interest in and awareness of Sukari. A delegation from the Ministry also visited Western Australia for meetings with the Department of Industry and Resources and included a visit to Kalgoorlie. During the year, His Excellency, The Minister also presented awards on behalf of the Egyptian Government to the Company's wholly owned subsidiary, Pharaoh Gold Mines NL and one of its Egyptian geologists, Mr Ismail Abd El-Khalek, acknowledging the Company's and Mr Abd El-Khalek's contribution and commitment to the Egyptian minerals industry. The Australian Ambassador to Egypt, Mr Robert Bowker also visited the Sukari site as part of the Company's policy of keeping the Australian Embassy informed with respect to the Company's progress and activities in Egypt. In November, the shareholders' AGM was held in London for the first time, with a very strong attendance, reflecting the significant level of investment in the Company by UK and European investors. This participation was further strengthened in March with the successful placement of 75 million shares to mainly UK institutional investors, raising Â£20.6 million (A$50.4 million), to assist with the development of the Sukari project. In September, Mr Stuart Bottomley was appointed to the board. Stuart resides in the UK and has in excess of twenty years experience in funds management and for the last fifteen years he has acted as a consultant to a number of private and public companies with a growing emphasis on the mining industry. In closing I also acknowledge the contribution of our staff in Australia and Egypt for their loyalty and dedication throughout the past year and my co-directors for their efforts. I look forward to welcoming you to the Annual General Meeting of the Company. On behalf of the Board Sami El-Raghy Chairman REVIEW OF OPERATIONS RESOURCE ESTIMATION Drilling at the Sukari Project site continued during the 2006 financial year after resumption of work on site in May 2005. Since re-starting field work, a total of 75,600m of drilling in 316 holes has been completed, of which 26,000m is RC. A total of 9 drill rigs are on site, building up from 5 initially being used. The mineral resource estimate has grown to 142.96 Mt @ 1.48 g/t Au for 6.79 Moz Au using a 0.5g/t Au cut-off grade. The work since resumption of exploration activities has doubled the resource base at Sukari. This has primarily been due to the significant increase in total drill metres obtained during the year, in effect, doubling the amount of drilling achieved in the first six years of the project. Cut-off Measured Indicated Inferred Total Total g/t Au Mt g/t Mt g/t Mt g/t Mt g/t Moz 0.50 36.06 1.45 54.63 1.50 52.30 1.50 142.96 1.48 6.79 0.70 27.24 1.73 41.77 1.78 37.3 1.80 106.34 1.78 6.09 1.00 18.42 2.15 28.64 2.21 24.40 2.40 71.47 2.24 5.15 The mineral resources are estimates of tonnes and grades that are anticipated to be recovered by open pit mining and are based on Multiple Indicator Kriging with block support correction. In general Measured resources lie in areas where drilling is available at a nominal 25 x 25 metre spacing, Indicated resources occur in areas drilled at approximately 25 x 50 metre spacing and Inferred resources exist in areas of broader spaced drilling. The resource estimate has been based on the sampling and geological logging coming from 647 diamond and RC drill holes combining to give approximately 130,000 metres. All assaying available at 21 July 2006 is included for the latest estimate. The resource data set comprises approximately 66,400 two-metre down hole composites and rock chip samples. The mineral resource estimates have been adjusted to present land surfaces and previous underground mining. Appropriate check sampling and assaying have been undertaken to verify the gold assays used in the resource estimation. DRILLING RESULTS Amun Zone Drilling was initially focused in the Amun Zone, from 9900N - 10700N, the open pit area of the Bankable Feasibility Study (BFS) (Figure 2). The aims of the drilling were: â€¢Convert as many Inferred resources lying inside the estimated pit shells as possible to Indicated and Measured, thereby maximising resource ounces for BFS, reserve calculations and detailed mine design work, as well as improving geological understanding and the 3D model. â€¢Maximise pit shells on geological information and not have pit shells bottoming on a lack of drill data. â€¢Infill identified gaps in the resource model, particularly at the footwall contact in areas where it starts to flatten and may be potential 'Hapi Shoot' style high grades, as well as test hangingwall porphyry units which are variably mineralised but poorly tested, particularly around 10,500N. â€¢Define extent and geology of mineralised porphyry to the south and at depth, close off if possible to south for infrastructure requirements and mine planning. The Sukari orebody is a variably altered granodioritic intrusion hosted in a complex mafic and intermediate volcano-sedimentary package, with late crosscutting andesite and dacitic dykes. The porphyry outcrop is expressed as a 2500 m long ridge rising to 350 m above the local wadi level. The texture of the rock appears porphyritic in areas and equigranular in others due to the effects of the overprinting alteration; hence the orebody has been termed the Sukari Porphyry. The hangingwall is a sheared mafic to intermediate package of volcaniclastic sediments and effusive lavas. The stratigraphy has been simplified into three rock types: Serpentinites, lapilli tuffs, and sediments. Listwaenite is a barren silica - carbonate (ankerite-siderite) alteration of the serpentinites. The footwall contact is typically a knife edge, structural contact to the strongly sheared, black, fine grained, graphitic schist unit, with serpentinites and tuffs also occurring in the footwall. Dacitic dykes are commonly intruded near the footwall contact, utilising the zone of weakness caused by the intense shearing and alteration. Around 10400N a red, hematitic alteration of the normally grey-green P1 porphyry occurs, termed P6 in the logging codes. North of 10550N the P6 alteration has flooded the rock and may be introduced with a northeast trending fault at around 10650N. The porphyry contains 99% of the known gold mineralisation which is hosted in through-going shears, breccia zones and quartz veins. The host sequence contains less than 1% of the bulk gold reserves, hosted in shears and along host-porphyry contact zones. Gold mineralisation in the main Sukari porphyry is associated with moderate (40 - 60o) east dipping quartz vein, breccia - shear zones, haloes of stacked extensional quartz veins and silica-sericite-ankerite-sulphide-kaolin alteration (Figure 4). Higher grades are associated with strongly sulphidic (particularly arsenopyrite), hydrothermal brecciated zones, shear zones and milky quartz veins. Fine grained visible gold is rare, but occurs usually in milky quartz veins or breccia zones, usually with sulphide (Figures 3 & 4). Higher gold grades sometimes occur at the footwall contact zone (Holes 169, 173 and 523, Figure 5). Mineralisation is also concentrated in zones of shearing, quartz flooding brecciation and quartz veining at the hangingwall contact. The porphyry at the contact in these higher grade zones is strongly sericite-silica-altered, kaolinitic in places, quartz and sulphide vein-rich and shows strong disseminated pyrite development and pyrite-arsenopyrite in quartz veins and at vein selvedges. The geology of the Amun Zone in the south shows a considerable curving and flattening of the FW contact, possibly creating a stronger zone of dilation, and hence enhanced gold grades. The mineralisation and porphyry is still open at depth and to the north of the proposed mining operations, and although appears to steepen and narrow in the south, hasn't conclusively been closed off. The drilling successfully achieved the stated aims and produced many outstanding assay intersections. Subsequent to satisfying the aims of increasing the size and confidence of the Amun Zone mine area and BFS resource, drilling progressed northward in a systematic fashion, into the Ra, Gazelle Zones and then the northern Pharaoh Zone. Ra Zone (10700 - 11200N) The aim of the Ra Zone drilling was to confirm continuity of the Sukari mineralised system to the north of the Amun Zone, outline inferred resources for further detailed delineation and start opening up the northern parts of the Sukari Hill (Pharaoh Zone) for systematic evaluation. The Ra zone from 10700N to 11200N has been infill drilled on 50m spaced sections, in some areas to 25m. Results show continuity of mineralisation through the northern part of the Amun zone, into the Ra Zone and onwards into the Pharaoh Zone, and is extremely encouraging for resource base expansion, future infill drill testing and resource modelling. The Ra Zone is characterised by the presence of large volumes of the red, porphyritic, hematitic altered P6 porphyry unit, as well as the Amun Zone type Main Porphyry P1. Geological and assay data shows mineralisation continuing strongly along strike to the north, mainly confined to the eastern half of the hill as accessible now, where the P1 type of porphyry predominates. Mineralisation zones are controlled by a series of sheeted, moderate (30 - 50o) east and west dipping structures, related to extensional quartz veining and alteration of the porphyry, with sericite, silica, kaolinite, ankerite and pyrite the main alteration minerals. Drill hole declinations were designed to be steep to effectively target these conjugate structures. Zones of stockwork mineralisation and alteration occur where the two structures intersect. Several significant results were returned from the drilling in the this zone, including 111m @ 15.06g/t Au from 473m in RCD553 on 11075N (Figure 6). Pharaoh Zone Drilling Drilling is currently underway in the Pharaoh Zone, following up strong indications of mineralisation from previous mapping, rock chip sampling and drilling. The aim of drilling is to define mineralisation continuity north to the end of the Sukari Hill, initially on 50m spaced sections, to an inferred resource category and for preliminary economic studies. Assay results are encouraging as they indicate economic gold values near surface. These correspond well with Au anomalous rock chip samples taken in early 2005 and the previously mapped quartz vein-shear-alteration zone striking grid north from about 11500N to the northern margin of the porphyry hill at 12200N. RCD471 on 11600N, near the start of the surface mapped strong quartz veining and alteration zone, returned a strongly mineralised intersection from surface of 12m @ 1.86g/t Au, characterised by silica-sericite-kaolinite altered and weathered P1, extensive quartz veining and weathered sulphide. The hole is weakly mineralised all the way down to 68m, with significant zones of 7m @ 1.22g /t Au from 38-45m and 9m @ 2.25g/t Au from 57 - 66m (incl. 2m @ 6.52g/t Au from 59m). RCD469, 479 and 480 have been drilled from Pharaoh Track at 11700N (Figure 7). The RCD469 RC pre-collar recorded 16m @ 1.15g/t Au from 29m (incl. 4m @ 2.86g/t from 41m). RCD479 is also mineralised from surface, with an assay intersection of 11m @ 1.97g/t Au. Interpretation indicates a significant west dipping structure, as well as the more common east dipping veins. Holes 467, 477, and 478 have been drilled on the Pharaoh and Dozer tracks on 11800N. All have recorded significant gold assays in the near surface environment. Current drilling and results on Adit, Accra, Mike and Lower Mike Tracks strongly suggests the near surface mineralisation extends south to around 11200N and north to 12100N, and is up to 100m wide in places where there is adequate drill coverage. Rockbreaker Access Tracks Up to five rockbreakers were used to cut drilling access tracks on the eastern flank of Sukari Hill (Figure 8) from 11000N to 12200N in the Ra and Pharaoh Zones, as well as initially in the Amun Zone to allow drill rig access. Work is now commencing on the northern and western parts of the hill to increase drill coverage in important areas for resource expansion. BANKABLE FEASIBILITY STUDY (BFS) A number of consulting and engineering companies were appointed to undertake components of the study as listed below. Ausenco â€¢Metallurgical testwork â€¢Process design â€¢Plant design â€¢Sea water supply pipeline and pumping station â€¢Site and camp power generation â€¢Site offices and services â€¢Processing operating and capital costs â€¢Infrastructure capital costs â€¢Implementation plan Australian Mining Consultants (AMC) â€¢Open pit optimization â€¢Mine design â€¢Mine schedules â€¢Equipment selection â€¢Mining operating and capital costs Hellman and Schofield â€¢Ore body model generation â€¢Grade control requirements George Orr and Associates â€¢Open pit geotechnical design Knight Piesold â€¢Tails dam geotechnical study â€¢Tails dam design â€¢Ore, low grade and waste geochemical assessment â€¢Plant site geotechnical study Environics â€¢Environmental impact assessment â€¢Chemicals management requirements â€¢Heavy fuel oil supply reliability Processing Route Selection / Metallurgy Following an update of a Scoping Study conducted in 2003 two process route options were selected for further review and metallurgical testwork to determine the optimal process route configuration for Sukari ore. Sukari ore is hard and abrasive with the majority of gold contained as fine particles associated with sulphides (predominantly pyrite and minor arsenopyrite in a ratio of approximately 80:20). A fine grind is required to liberate gold particles for leaching in a cyanide solution. Extensive metallurgical testwork was completed under Ausenco's supervision. A total of 2,487 kg was used for metallurgical testwork. Initially, 1,847kg of samples were dispatched to Perth and tested at Independent Metallurgical Laboratories (IML). The sample sets represented ore material types expected to be milled over the project life and included variability samples for process optimisation. Samples of ore with variably weathered sulphides and samples of high grade, kaolinised ore were assessed for process route studies. Two process routes assessed were:- 1. Whole of ore CIL 2. Flotation to produce a sulphide concentrate with regrind and leach of the concentrate with/without leach of the flotation tailings The IML testwork program showed that a process route including flotation of a sulphide concentrate, with or without a CIL leach phase on the flotation tailings, resulted in a better gold recovery than whole of ore CIL leach. Gold recovery when using a float tails leach phase averaged 87-88% across all ore types. Re-logging of diamond drilling on 50m sections between 9900 and 11200N commenced in March and in parallel additional testwork commenced to correlate sulphide mineralisation oxidation state with testwork results. A further 640kg of metallurgical samples were dispatched to Perth with test work undertaken at the AMMTEC laboratory. Samples have also been taken for Mine Scheduling variability work, particularly the early mined weathered porphyry material. Re-logging of holes on 50m sections from 9900N to 11200N was completed for weathered sulphide concentrations for metallurgical recovery characteristics, as recommended by Ausenco. Metallurgical testwork indicated a very high recovery of gold to concentrate for primary ore through flotation rather than whole of ore CIL and at lower operating and capital costs. As such this process route was selected as the preferred process for Sukari ore. Subsequent testwork showed that a 12 hour leach of flotation tailings was economic where sulphides were oxidized and hence flotation inhibited. The final process design included float tails leach at 150 (micro)m for selected ore types where partial or full oxidation of sulphides had occurred. All planned metallurgical testwork has been completed. The process to re-log core and undertake metallurgical testwork (inclusive of variability testing) delayed the BFS through the second half of the financial year but was completed just prior to year end. This process had a very positive outcome with recoveries being improved significantly from 80-82% to 87-88%. Mining Study Hellman and Schofield completed three ore body models for mine design. The models were each done using H&S proprietary software, GS3, to produce a multiple indicator kriged resource with 25 x 20 x 5 meter (north, south, RL) panels. From March the orebody models used in BFS planning had a new category included to model the degree of oxidation of sulphide minerals to enable metallurgical recovery to be assigned to ore blocks. Density and compressive strength samples were collected for geotechnical analysis. A program of nine test pits and twenty nine drill holes were completed for geotechnical assessment of the footwall and hangingwall rock units. The geological structure at Sukari is complex with rocks displaying well developed shearing, faulting, folding and jointing. Hangingwall rock units were described as moderately strong to very strong whilst the footwall comprises moderately strong to strong rocks. For the purposes of geotechnical design for the open pit walls, the pit area has been divided into two domains. The north, east and southern walls (domain 1) have been designed with ten meter high batters at 80degreeswith 5 meter berms. Every 50 meters vertically a ten meter safety berm will be left. The western wall (domain 2) has been designed with ten meter batters at 80degrees with a ten meter berm. Every 60 meters vertically a 16 meter safety berm will be left. Due to the better geotechnical quality of the east wall the ramp design will be contained within this wall. The mining study being carried out by AMC has indicated an open pit mining operation is capable of producing 4mtpa of ore for the Sukari plant through the development of three pit stages. The pit stage designs and life of mine schedules have confirmed the mine is capable of producing feed for the plant for in excess of a ten year mine life at a consistent 4mtpa. Optimisation work undertaken showed that the development of the open pit with owner operated earthmoving fleet rather than contract mining gave the lowest development costs. Due to the long mine life already evident from resource drilling to date and the potential for increased mine life through further resource drilling it is planned to purchase an owner operated fleet from the commencement of bulk earthmoving operations. Bulk earthmoving will require a fleet of up to four 250 tonne class excavators matched to 150 tonne class dump trucks with associated ancillary fleet. Total material movement will average 41 million tonnes per annum for the first five years. A pioneering phase utilizing contractors for mining may be required to develop pit benches for the bulk earthmoving fleet and to develop suitable haul ramps to the top of the Sukari hill. Life of mine schedules and various mining strategies have been assessed and reviewed with each revision in ore body model. Further work is required to assess the potential for incorporating the significant proportions of marginal grade material produced over the life of the project in to the milling schedule. Tailings Dam and Environmental Study Knight Piesold undertook a number of studies related to tailings dam location and design, plant geotechnical assessment, tailings and waste geochemical characteristics and surface water management. Two tailings dam locations were considered and an area located in a natural, confined catchment to the south east of the operation was selected for geotechnical assessment and design. Four vertical HQ diamond drill holes to 20-30m and one angled hole to 50m were drilled at the tailings dam location. Fourteen packer tests were done to measure permeability. Forty two test pits were excavated with a 20 tonne hydraulic excavator. The test pit depths varied across the dam floor and were limited to the depth the excavator could penetrate the basin rock. The permeability tests show the dam basin to have a variable permeability, insufficiently low to enable tailings to be discharged directly without an additional drainage barrier being installed. Environics, an Egyptian environmental consultancy group, undertook several studies including:- â€¢A review of the supply stability for heavy fuel oil for site power generation; â€¢A review of chemicals management issues inclusive of process chemicals and explosives; â€¢A review of the management of matters relating to historical artefacts; and â€¢Environmental Impact Assessment. No significant issues have been highlighted by these studies. Environics commenced the environmental impact assessment but the process as been delayed whilst metallurgical process route assessment and revisions to the mining plan were conducted. PROCESS PLANT DESIGN AND CONSTRUCTION As the metallurgical and process flow sheet elements of the BFS have been completed, this has allowed the Company to search for appropriate items of used process plant. The company is considering the purchase of used process plant items in an effort to reduce both the procurement time and the cost. The search has identified a recently closed operation that contains most of the process plant items that Centamin will require for the Sukari project. The potential purchase of this plant represents an opportunity to materially reduce the cost of development and also accelerate the construction timetable. Testing of the structural integrity of key plant items has been completed and negotiations with the plant owner are at an advanced stage. By necessity, the completion of the Feasibility Study will be delayed whilst a thorough review of the impact of the potential purchase of this process plant on capital and operating costs is carried out. REGIONAL EXPLORATION Although the resource drill out and investigation of Sukari Hill took priority, near mine exploration and prospecting work was carried out during the year. Work involved data compilation, rock chip sampling and mapping. Several samples returned economic assay results, including the Student Prospect, an outcropping quartz vein in sheared and altered country rock a few hundred metres to the north of Sukari Hill (Figure 9). The immediate footwall schist to the quartz vein returned a 1.2m channel sample assay of 2.79g/t Au. Samples were also taken from several geotechnical pits and outcrops at the planned infrastructure sites, and some sampling in a nearby wadi area of the proposed tailings storage facility (TSF). No significant values were returned. A more detailed regional exploration program will be developed in the future when the Sukari Mine detailed resource definition permits. The Company realises the importance of maintaining a steady 'pipeline' of regional and near mine prospects to identify additional gold resources for the Project area. Significant Assay Results -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ Hole Northing Easting Azimuth Dip Length From To Interval Grade -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ D338A 10454 10506 270 -70 254.92 131 136 5 14.76 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ D340 10299 10620 274 -56 301 186 205 19 5.85 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ D346 10372 10720 262 -69 351 295 322 27 3.40 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 307 312 5 11.59 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ D351 10727 10590 270 -80 443.5 422 423 1 65.60 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD359 10499 10761 271 -76 479.3 356 428 72 2.65 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 423 424 1 43.90 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ D360 10625 10608 266 -74 388.1 209 377 168 2.55 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 328 333 5 10.13 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD362 10585 10630 270 -65 385.4 226 362 136 2.58 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 276 280 4 11.23 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 345 347 2 28.54 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ D363 10871 10585 260 -70 349 289 299 10 6.39 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD366 10547 10577 277 -70 317.6 139 151 12 3.82 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 206 245 39 2.65 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD367 10826 10542 277 -80 382.5 230 303 73 2.65 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 265 274 9 7.17 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 279 292 13 5.54 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD370 10023 10518 270 -88 302.9 149.5 224 74.5 4.63 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ D371 10851 10428 270 -90 110.82 34 39 5 5.57 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD388 10301 10644 270 -81 349.7 244 274 30 3.65 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 265 268 3 20.78 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 294 318 24 9.70 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 295 296 1 185.00 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 294 303 9 23.78 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD391 10604 10832 270 -65 480.9 381 395 14 3.93 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 401 436 35 4.21 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ D395 10750 10807 270 -55 480 352 353 1 573.00 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD402 10684 10858 270 -57 552 450 458 8 9.09 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 492 496 4 14.02 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD406 10373 10450 270 -60 160 63 69 6 5.07 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 105 146 41 3.69 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ DGT408 10255 10429 270 -60 296.6 92 118 26 4.23 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 246 248 2 13.55 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ D410 10871 10680 270 -75 528.1 104 110 6 3.91 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 128 129 1 21.60 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 325 397 72 2.30 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 443 450 7 5.78 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RC413 10348 10438 270 -62 150 94 99 5 19.21 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RC415 10300 10445 270 -60 150 95 105 10 3.64 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 112 129 17 2.56 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD416 10000 10523 270 -83 306.6 212 235 23 6.92 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 217 228 11 12.53 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 243 248 5 3.97 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD420 11077 10801 270 -87 387 283 321 38 2.62 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD421 11125 10769 270 -88 431.1 305 315 10 3.54 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD431 11084 10916 270 -88 237 175 179 4 4.18 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD437 11170 10766 270 -88 365.1 299 365.1 66.1 2.18 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD440 11125 10964 270 -70 296 123 147 24 2.03 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD441 11179 10961 270 -70 306.9 138 146 8 6.80 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 144 145 1 38.50 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ D455 11023 10852 270 -60 300.84 226 300.84 74.84 2.42 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ D456 11076 10798 270 -65 324.47 251 270 19 2.04 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD458 10980 10638 270 -87 595 415 439 24 2.61 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 472 548 76 1.96 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD461 11027 10657 270 -87 647.4 478 571 75 1.91 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 519 520 1 49.80 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD467 11800 10915 270 -65 268.00 50 76 26 1.66 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl 67 69 2 6.71 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD469 11700 10796 270 -87 264.80 16 24 8 1.12 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 29 45 16 1.15 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD471 11600 10690 270 -87 386.8 0 12 12 1.86 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 57 66 9 2.25 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD477 11817 10825 270 -87 278.4 92 97 5 1.77 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 119 130 11 1.25 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD478 11817 10824 270 -67 368 4 27 23 1.30 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 15 16 1 7.68 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD479 11700 10760 270 -87 380 0 11 11 1.97 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 59 101 42 1.26 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD480 11700 10760 270 -65 320 26 30 4 2.48 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 38 85 47 0.87 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD492 10003 10521 270 -75 271.1 181 198 18 8.80 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 188 193 5 21.57 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD497 10079 10594 270 -83 380.00 206 244 38 3.57 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 227 244 17 5.79 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 233 237 4 13.70 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 263 284 21 2.50 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD498 10099 10542 270 -75 308.3 198 278 80 2.30 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD499 9990 10553 270 -89 371.30 279 319 40 2.86 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 287 288 1 12.20 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 292 298 6 8.09 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 301 302 1 8.27 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD500 10149 10556 270 -63 277.6 65 121 56 2.03 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD502 10202 10557 270 -63 348.1 108 146 38 6.86 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 108 117 9 19.61 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 137 140 3 8.09 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD508 10451 10636 270 -70 341.70 215 275 60 2.40 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD509 10504 10608 270 -84 384.5 295 329 34 3.08 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD513 10787 10750 270 -70 481.8 391 396 5 10.13 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 409 441 32 1.91 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD522 10480 10756 270 -70 449.6 336 360.6 24.6 4.90 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 342 350 8 12.04 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD523 10400 10696 270 -76 384.9 266 272 6 5.09 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 269 270 1 15.1 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 313 322 9 4.07 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl 314.4 315 0.6 26.3 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD524 10795 10553 270 -63 284.8 131 176 45 3.26 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD525 10800 10687 270 -72 455.5 233 251 18 3.07 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 264 313 49 1.51 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ 319 347 28 2.02 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD526 10778 10684 270 -67 452.8 326 388 62 2.01 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD536 11647 10727 270 -73 312.20 0 26 26 1.65 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ D543 11085 10912 270 -10 112.72 26 46 20 1.86 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD553 11079 10914 270 -72 614.4 473 584 111 15.06 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ incl. 572 575 3 440.6 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD569 11303 10884 270 -87 437.7 303 347 44 2.26 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD570 11352 10782 270 -87 150 9 20 11 2.66 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ RCD578 11449 10718 270 -89 136 65 81 16 1.76 -------- ------- ------- ------- ----- ------- ------ ------ ------- ------ Intersections based on Composite and Single Sample cut off grade of 0.5g/t; Max Internal Waste 3m. Notes: 1. Pharaoh Gold Mines NL (a wholly owned subsidiary of Centamin Egypt Limited) is the holder of a Mining (Exploitation) Lease covering an area of 160 km2 that contains the proposed Sukari mine site and surrounding prospects. This lease is issued under the existing Law 222 of 1994, which was enacted by the Egyptian Government specifically to accommodate the Company's exploration and mining activities in the Eastern Desert (the Eastern Desert Concession). The Lease has a tenure of thirty years with the option to renew for a further thirty years. 2. An Egyptian mineral concession held under application by Egyptian Pharaoh Investment (EPI) an Egyptian Company jointly owned by Centamin Egypt Limited and Kara Gold NL under an agreement with the Egyptian Government. Under the terms of this agreement to develop a heavy minerals project at Rosetta on the Mediterranean coast, east of Alexandria, any profit from mining and separation of the heavy minerals will be shared with the Egyptian Government after EPI recoups all of its development expense. Any profit from the upgrading of the ilmenite to pigment quality TiO2 (titanium dioxide) will be 100% EPI. AUSTRALIAN PROJECTS Nelson's Fleet The Company is entitled to a royalty over the Nelson's Fleet gold project near St Ives, Western Australia, from the St Ives Gold Mining Co Pty Ltd, a subsidiary of Gold Fields Ltd. The Company has not been informed of any mining of the tenement to date. Information in this report which relates to exploration, geology, sampling and drilling is based on information compiled by Mr R Osman who is a member of the Australasian Institute of Mining and Metallurgy with more than five years experience in the fields of activity being reported on and is an employee of the Company. His written consent has been received by the Company for this information to be included in this report in the form and context that it appears. Mr Osman declares an interest in shares/options of the Company. The information in this report that relates to mineral resources is based on work completed by Mr Nicolas Johnson, who is a Member of the Australian Institute of Geoscientists. Mr Johnson is a full time employee of Hellman and Schofield Pty Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Johnson consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. For this report, measured resources lie in areas where drilling is available at nominal 25 x 25 metre spacing, indicated resources in areas drilled at approximately 25 x 50 metre spacing and inferred resources in areas of broader spaced drilling. The resource model extends to 750mRL (approximately 400 metres below surface) and resources are estimates of recoverable tonnes and grades using Multiple Indicator Kriging with block support correction. Appropriate check sampling has been undertaken to verify the gold assays used in this estimate. CORPORATE ACTIVITIES During July 2005, His Excellency Engineer Sameh Fahmy, the Minister for Petroleum and Mineral Resources, the Deputy Minister, Engineer Amghad Ghonem, and the entire Egyptian Mineral Resource Authority ('EMRA') Board, together with a large media entourage visited the Sukari Project site where the Minister stated on national television that the project had his, and the Egyptian Government's full support. During September 2005, a delegation from EMRA and the Ministry for Petroleum and Mineral Resources attended a mining conference in Perth, visited the super pit in Kalgoorlie and met with the representatives of the Department of Industry and Resources of Western Australia in an effort to gather information to assist in the preparation of the new mining legislation in Egypt. On 26 September 2005, Mr Stuart Bottomley was appointed as a director of the Company. In preparation for the development of the Sukari Project, Wayne Foote was appointed as the Project Manager in October 2005. In November 2005, the Annual General Meeting of shareholders was held in London for the first time with a very strong attendance, reflecting the significant ownership by UK and European investors. Based on this success it is intended to hold future meetings in the UK. Also in November 2005, the Company's fully owned subsidiary, Pharaoh Gold Mines NL ('PGM') and one of its Egyptian geologists, Mr Ismail Abd El-Khalek, were honoured with awards for outstanding performance during 2005. These awards were presented by His Excellency, Engineer Sameh Fahmy, the Minister for Petroleum and Mineral Resources, on behalf of the Egyptian Government, acknowledging the Company's and Mr El-Khalek's contribution and commitment to the Egyptian minerals industry. During December 2005, the Australian Ambassador to Egypt, Mr Robert Bowker visited the Sukari site. The visit formed part of the Company's policy of keeping the Australian Embassy informed with respect to the Company's progress and activities in Egypt and ensuring a good working relationship. In March 2006, the Company completed a placement raising approximately GBP 20,600,000 before expenses. 75,000,000 shares were placed at 27.5p with the view to using the funds to secure long lead time items and to cover pre-mining costs as well as general working capital. In May 2006, His Excellency Engineer Sameh Fahmy, the Minister for Petroleum and Mineral Resources, and members of Parliament revisited site, resulting in positive media coverage and increased public interest in the project. DIRECTORS' REPORT The Directors of Centamin Egypt Limited submit herewith the annual financial report of the Company for the financial year ended 30 June 2006. In order for the Company to comply with the provisions of the Corporations Act 2001, the Directors' Report is as follows:- DIRECTORS The names and particulars of the directors of the Company during or since the end of the financial year are:- Mr Sami El-Raghy B.Sc. (Hons), FAusIMM, FSEG Chairman, age 65 Director since 29 April 1993 A graduate of Alexandria University in 1962, Mr El-Raghy worked in Egypt and Europe before moving to Australia in 1968 and joining American Smelting and Refining Company (Asarco). He was instrumental in the discovery and development of a number of gold mines, including the Wiluna Gold Mine for Asarco and the Mt Wilkinson Gold mine for Chevron Exploration. Mr El-Raghy recognised the potential of the Marymia Dome and the Barwidgee Yandal Belt long before these areas became the most sought after mining areas in Australia. Mr El-Raghy brings to the board over 39 years experience in the industry, both in Australia and overseas. Mr Josef El-Raghy B.Comm Managing Director/CEO, age 35 Director since 26 August 2002 Josef El-Raghy holds a Bachelor of Commerce Degree from the University of Western Australia and had a ten year career in stock broking. He was formerly a director of both CIBC Wood Gundy and Paterson Ord Minnett. His expertise in international capital markets has greatly assisted the Company in its fundraising and development activities. Mr El-Raghy was also a director of ISIS Resources Plc (now Verona Pharma Plc) from 24 February 2005 to 18 September 2006. Mr Colin Cowden FAII, ASA, ACIS, ACIM, FNIBA, CD Non Executive Director, age 62 Member Audit Committee Member Remuneration Committee Director since 8 March 1982 Colin Cowden is the Executive Chairman of Cowden Limited, a licensed insurance broking company formed in 1972. Cowden Limited is a prominent broking firm in Western Australia with branch offices in Sydney, Melbourne and Adelaide. Mr Cowden has been a director of Wentworth Holdings Limited since 26 October 2005, and from 27 November 1998 until 27 October 2005, was a director of OAMPS Limited. Mr G. Brian Speechly FAusIMM Non Executive Director, age 73 Member Audit Committee Member Remuneration Committee Director since 15 August 2000 Brian Speechly is a Fellow of the Australasian Institute of Mining and Metallurgy with over 49 years experience in the mining industry. During his career, Mr Speechly has been involved in over 320 mining projects and is recognised in Australia and overseas as an expert in both underground and open pit mining and design. He is particularly noted for his innovative and low cost approaches to mining issues. Mr Speechly has been a director of Dynasty Metals & Mining Inc since 28 April 2004. Dr Thomas G. Elder PhD, FIMM, FGS Non Executive Director, age 67 Director since 8 May 2002 Dr Elder is a geology graduate of Durham University and post-graduate NATO Scholar at the University of Oslo. His extensive background in mineral exploration was gained with major companies including BP and Rio Tinto. Dr Elder ran exploration programmes in the UK, Spain, Italy, Portugal and Greenland for Cominco, prior to his appointment as worldwide Exploration Manager for BP Minerals in 1983. Following the take-over by Rio Tinto in 1989, he had special responsibility for project development in the Former Soviet Union. Dr Elder has been a non-executive director of Angus & Ross since 12 January 2006 and has been the President of Mano River Resources Inc since 04 October 1998. Mr H. Stuart Bottomley Non Executive Director, age 61 Director since 26 September 2005 Stuart Bottomley worked as a portfolio manager for over twenty years, firstly with the 'Target Group' of trusts and subsequently with Fidelity International. For the last 15 years, he has acted as a consultant to a number of private and public companies with a growing emphasis on the mining industry. Mr Bottomley has also been a director of ISIS Resources Plc (now Verona Pharma Plc) since 24 February 2005 and African Consolidated Resources Plc since 27 May 2005. MANAGEMENT Mr Wayne Foote (BEng, MAusIMM) Project Manager Wayne Foote holds a Bachelor of Engineering in Mining and has been involved at a senior level in several mining operations, most recently as the Operations Manager of the Golden Pride Project in Tanzania for Resolute Limited. Wayne is responsible for the management and supervision of the Sukari Project development, including the preparation of the upgraded feasibility study to a bankable standard for the development of a 4 to 5 million tonne per annum processing facility, as well as subsequent personnel recruitment, development, construction and operation of the project. Mr Roger Speers BEng (1st Hons WASM), AIG Senior Exploration Geologist Mr Speers is an experienced exploration geologist who was employed for 41/2 years in regional exploration and near mine resource development with AngloGold Ashanti at their Geita Gold Mine and regional projects in Tanzania. Prior to Tanzania, Mr Speers was employed by AngloGold and Acacia Resources in Western Australia at their Sunrise Dam and Laverton/Kalgoorlie regional exploration teams. Mr Speers is responsible for developing the potential additional regional gold resources around Sukari as well as assisting with the Sukari resource development. Mr Richard Osman B.Sc.(Hons.), M.Sc., MCSM, MAusIMM Senior Mine Geologist - Sukari Mr Osman holds a master's degree from Camborne School of Mines in Mining Geology and is an experienced mine and exploration geologist who was employed in the mining geology and near mine resource development for 5 years at the Jubilee and Big Bell operations in Western Australia owned by New Hampton Goldfields and Harmony Gold. Mr Osman is responsible for drill hole planning, reserve definition and implementation of and maintaining all of the mining data systems at Sukari. Mrs Heidi Brown GCertAppFin (Finsia) Company Secretary Mrs Brown has over 8 years experience in the finance and securities industries and has completed the Chartered Secretaries Australia Graduate Diploma of Corporate Governance. Mrs Brown also holds a Graduate Certificate of Applied Finance and Investment and a Diploma of Financial Advising through the Financial Services Institute of Australasia (Finsia). Mr Mark Smith B.Bus. (Accy), CPA, MAICD Finance Manager Mr Smith has a Bachelor of Business undergraduate degree, with a major in Accountancy, obtained from the Queensland University of Technology and is a Certified Practicing Accountant with 15 years post-graduate experience across a wide variety of industries. He has held senior financial positions with a number of Australian publicly listed companies in the resources sector. Mr Youssef El-Raghy General Manager - Egyptian Operations An officer graduate of the Egyptian Police Academy Mr El-Raghy held senior management roles within the Egyptian Police force for a period in excess of ten years, having attained the rank of captain, prior to joining the Company. Mr El-Raghy has extensive contacts within the government and industry and maintains excellent working relationships with all of the Company's stakeholders within Egypt. Mr Esmat El-Raghy Field Manager - Sukari Operation A retired Air Defence General, Esmat is responsible for field administration and liaising with the army, police and local authorities. Mr Taha Lamada Administration Manager - Egyptian Operations A commerce graduate of Alexandria University, Taha is responsible for Egyptian administration and human resource management. Mr Samir Abd El-Aziz Finance Manager - Egyptian Operations A Chartered Accountant and member of the Society of Accounting and Auditing, Samir is responsible for implementation of the Company's Egyptian budget and dealings with Egyptian banks and financial institutions. DIRECTORS' MEETINGS The number of directors' meetings and number of meetings attended by each of the directors of the Company during the financial year were: Director No of Meetings No of Meetings Held Attended Mr S El-Raghy 8 8 Mr C Cowden 8 8 Mr G B Speechly 8 3 Dr T G Elder 8 8 Mr J El-Raghy 8 8 Mr H S Bottomley 8 6 In addition to these formal meetings, during the year the Directors considered and passed five (5) Circular Resolutions pursuant to clause 15.10 of the Company's constitution. AUDIT COMMITTEE MEETINGS Director No of Meetings No of Meetings Held Attended Mr C Cowden 1 1 Mr G B Speechly 1 1 Since year end, the Audit Committee has met once to consider matters within its terms of reference. REMUNERATION COMMITTEE MEETINGS AND RESOLUTIONS Director No of Meetings No of Meetings Held Attended Mr C Cowden 1 1 Mr G B Speechly 1 1 During the year, the Remuneration Committee met once to consider matters within its terms of reference and also passed one (1) Circular Resolution pursuant to the Company's constitution. PRINCIPAL ACTIVITIES The principal activity of the consolidated entity during the course of the financial year was the exploration for precious and base metals. There were no significant changes in the nature of the activities of the consolidated entity during the year. DIVIDENDS No dividends have been declared or paid since the end of the previous financial year. CHANGES IN STATE OF AFFAIRS There was no change in the state of affairs of the consolidated entity during the financial year. FUTURE DEVELOPMENTS It is the objective of the Company, to continue to drill at the Sukari project, so as to increase the overall size of the geological resource, whilst at the same time, conclude the Bankable Feasibility Study into the proposed construction of a processing plant with a throughput rate of 4 to 5 million tonnes per annum. Subsequent to this, the Company's intention is to arrange project development finance so as to commence construction of the processing plant and ancillary infrastructure. OPTIONS OPTIONS ISSUED DURING THE FINANCIAL YEAR A total of 5,750,000 unlisted options were issued during the financial year to 30 June 2006. The details of these options are as follows:- Number of Ordinary shares under option Exercise Price Expiry Date 4,250,000 $0.3500 31 October 2010 1,500,000 $0.4355 08 December 2008 OPTIONS CONVERTED DURING THE FINANCIAL YEAR A total of 1,235,000 unlisted options were exercised during the financial year to 30 June 2006. The details of these options are as follows:- Number of Options Exercise Price Expiry Date $ 250,000 0.2900 11 November 2005 510,000 0.2310 12 November 2006 130,000 0.2310 17 November 2006 250,000 0.3549 15 December 2006 45,000 0.2804 17 February 2008 50,000 0.3500 31 October 2010 The market weighted average closing price of Centamin Egypt Limited shares during the 2005-2006 year was $0.5392. OPTIONS GRANTED TO DIRECTORS There were 1,500,000 options granted to directors during the financial year to 30 June 2006. The details of these options are as follows:- Name Office Issue Date No of Exercise Expiry Date Unquoted Price Options Mr C N Non-Executive 08 December 2005 500,000 43.55 cents 08 December 2008 Cowden Director Dr T G Non-Executive 08 December 2005 500,000 43.55 cents 08 December 2008 Elder Director Mr H S Bottomley Non-Executive 08 December 2005 500,000 43.55 cents 08 December 2008 Director EMPLOYEE OPTION PLAN At the Annual General Meeting on 29 November 2002, shareholders approved the Employee Options Plan 2002. The following options have been issued to Executives and Employees under the plan to date. Number of Ordinary shares under option Exercise Price Expiry Date $ 250,000 0.2900 11 November 2005 1,160,000 0.2310 12 November 2006 130,000 0.2310 17 November 2006 750,000 0.3549 15 December 2006 775,000 0.2804 04 February 2008 410,000 0.2804 17 February 2008 1,500,000 0.4355 08 December 2008 4,250,000 0.3500 31 October 2010 250,000 0.6566 30 August 2009 OPTIONS ISSUED SUBSEQUENT TO BALANCE DATE On 30 August 2006, an additional 250,000 options were issued at an exercise price of $0.6566 with a term of 3 years. These options vest over 12 months with 50% exercisable after 6 months and the other 50% exercisable after 12 months. OPTIONS EXERCISED SUBSEQUENT TO BALANCE DATE 450,000 options have been exercised subsequent to balance date. The details of these options are as follows:- Number Exercise Price Expiry Date $ 350,000 0.2310 11 November 2005 100,000 0.2804 04 February 2008 ENVIRONMENTAL REGULATIONS The consolidated entity is currently complying with relevant environmental regulations and has no outstanding environmental orders against it. EVENTS SUBSEQUENT TO BALANCE DATE In July 2006, the company announced that it is considering the purchase of used process plant items in an effort to reduce both the procurement time and the cost for major plant items. The search has identified a recently closed operation that contains most of the process plant items that Centamin will require for the Sukari project. The potential purchase of this plant represents an opportunity to materially reduce the cost of development and also accelerate the construction timetable. Testing of the structural integrity of key plant items has been arranged and negotiations with the plant owner are at an advanced stage. Consequently the completion of the Bankable Feasibility Study (BFS) will be delayed while a thorough review of this process plant is completed. REVIEW OF OPERATIONS A review of the Company's operations is located at the beginning of this report. INDEMNIFICATION OF DIRECTORS & OFFICERS During the financial year, the Company paid a premium in respect of a contract insuring the directors and officers of the Company and any related body corporate against a liability incurred as a director or officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Company has not otherwise indemnified its directors or officers. REMUNERATION REPORT KEY MANAGEMENT PERSONNEL DETAILS The key management personnel of Centamin Egypt Limited during the financial year were:- - Mr Sami El-Raghy (Chairman), appointed 29 April 1993; - Mr Josef El-Raghy (Managing Director/CEO), appointed 26 August 2002; - Dr Thomas G Elder (Non-Executive Director) appointed 08 May 2002; - Mr Colin Cowden (Non-Executive Director) appointed 08 March 1982; - Mr G Brian Speechly (Non-Executive Director), appointed 15 August 2000; - Mr H Stuart Bottomley (Non-Executive Director), appointed 26 September 2005; - Mrs Heidi Brown (Company Secretary), appointed 21 July 2004; and - Mr Wayne Foote (Project Manager), appointed 13 October 2005. KEY MANAGEMENT PERSONNEL COMPENSATION The Remuneration Committee reviews the remuneration packages of all key management personnel on an annual basis. Remuneration packages are reviewed and determined with due regard to current market rates and are benchmarked against comparable industry salaries, adjusted by a performance factor to reflect changes in the performance of the Company. Short-term employee benefits Post-employment Other Share-based payment benefits long- Equity-settled term Salary & Bonus Non- Other Super- Other employee Termination Shares Options Cash Fees monetary annuation benefits benefits & units & rights settled Other Total 2006 $ $ $ $ $ $ $ $ $ $ $ $ $ S 357,353 - - - - - - - - - - - 357,353 El-Raghy* J El-Raghy* 303,609 - 24,978 - 2,860 - - - - - - - 331,447 T Elder* 49,167 - - - - - - - - 31,868 - - 81,035 C Cowden 25,000 - - - 2,250 - - - - 31,868 - - 59,118 G B Speechly 25,000 - - - 2,250 - - - - - - - 27,250 H Bottomley* 44,107 - - - - - - - - 31,868 - - 75,975 W Foote (1) 326,087 - 2,790 - 29,348 - - - - 59,968 - - 418,193 H Brown** 67,000 20,000 - - 7,830 - - - - 16,286 - - 111,116 *(1) Total 1,197,323 20,000 27,768 - 44,538 - - - - 171,858 - - 1,461,487 * Non-resident directors ** Options value as per Black Scholes pricing method *** Bonus paid in respect to added responsibilities and represents 18% of total remuneration. (1) W Foote and H Brown were the only two Executive employees of the Consolidated group during the financial year. Short-term employee benefits Post-employment Other Share-based payment benefits long- Equity-settled term Salary & Bonus Non- Other Super- Other employee Termination Shares Options Cash Fees monetary annuation benefits benefits & units & rights settled Other Total 2005 $ $ $ $ $ $ $ $ $ $ $ $ $ S El-Raghy* 376,283 150,000 144 - - - - - - - - - 526,427 J El-Raghy 224,808 - 20,449 - 22,481 - - - - - - - 267,738 T Elder* 49,580 - - - - - - - - 9,573 - - 59,153 C Cowden 25,000 - - - 2,250 - - - - 9,573 - - 36,823 G B Speechly 25,000 - - - 2,250 - - - - 9,573 - - 36,823 H Michael 89,856 - - - 8,986 - - - - - - - 98,842 **** M J Lynch 74,489 - - - 10,571 - - - - 16,851 - - 101,911 D Franks 87,599 - - - 16,588 - - - - 9,997 - - 114,184 M Kriewaldt 69,000 - - - - - - - - - - - 69,000 H Brown 51,596 - - - 4,644 - - - - 15,425 - - 71,665 C Tyndall 17,832 - - - 189 - - - - 4,568 - - 22,589 ***** Total 1,091,043 150,000 20,593 - 67,959 - - - - 75,560 - - 1,405,155 * Non-resident directors ** Options value as per Black Scholes pricing method *** Bonus paid in respect to performance and represents 28.5% of total remuneration. **** Mr Michael ceased employment with the Company on 26 November 2004. ***** Mrs Tyndall ceased employment with the Company on 19 July 2004. Employment Contracts of Directors and Senior Executives Remuneration and other terms of employment for the following key management personnel are formalised in employment agreements, the terms of which are set out below:- Josef El-Raghy, Managing Director/CEO - term: 3 years (expiring 01 September 2008) - base salary: $300,000 pa, reviewed annually by the remuneration committee Sami El-Raghy, Chairman - term: 3 months notice of termination period - base salary: $310,000 pa plus 27.5% loading for time spent in Egypt, reviewed annually by the remuneration committee Wayne Foote, Project Manager - term: 1 year (expiring 13 October 2006) - base salary: $430,912 plus 9% superannuation Heidi Brown, Company Secretary - term: 1 month notice of termination period - base salary: $70,000 + 9% superannuation, reviewed annually by the remuneration committee No key management personnel is entitled to any termination payments apart from remuneration payable up to and including the date of termination and all payments due by way of accrued leave. Options Issued to Key Management Personnel Options are issued to key management personnel under the Employee Share Option Plan 2002 as part of their remuneration. Options are offered to key management personnel at the discretion of the Directors, having regard, among other things, to the length of service with the Group, the past and potential contribution of the person to the Group and in some cases, performance. The following options have been issued to key management personnel to date:- Name Office Issue Date No of Exercise Expiry Date Unquoted Price Options Mr C N Non-Executive 15 December 2003 250,000 35.49 cents 15 December 2006 Cowden Director 08 December 2005 500,000 43.55 cents 08 December 2008 Dr T G Non-Executive 15 December 2003 250,000 35.49 cents 15 December 2006 Elder Director 08 December 2005 500,000 43.55 cents 08 December 2008 Mr G B Non-Executive 15 December 2003 250,000 35.49 cents 15 December 2006 Speechly Director Mr H S Bottomley Non-Executive 08 December 2005 500,000 43.55 cents 08 December 2008 Director Mrs H Company 12 November 2003 100,000 23.10 cents 12 November 2006 Brown Secretary 04 February 2005 200,000 28.04 cents 04 February 2008 Mr W Project 31 October 2005 2,500,000 35.00 cents 31 October 2010 Foote Manager The options issued to C Cowden, T Elder, G Speechly, H Bottomley and H Brown vest and are exercisable over a period of 12 months, with 50% vesting and exercisable after 6 months and the other 50% vesting and exercisable after 12 months of issue. These options have a term of 3 years. The options issue to W Foote are subject to performance based hurdles. 500,000 of the 2,500,000 options may only be exercised after the completion of the bankable feasibility study and subsequent bank finance approval. A further 1,000,000 options may be exercised on completion of construction and the remaining 1,000,000 options may be exercised following the first gold pour from the Sukari Gold Project. The options have a term of 5 years. These performance conditions were chosen as they reflect the key objectives of W Foote's role as project manager. Options Exercised by Key Management Personnel The following options were exercised by key management personnel during the year:- Name Office Exercise No of Unquoted Exercise Expiry Date Date Options Price Mr C N Non-Executive 26 May 250,000 35.49 cents 15 December Cowden Director 2006 2006 Mrs H Company 27 April 100,000 23.10 cents 12 November Brown Secretary 2006 2006 The options exercised by C Cowden during the year were issued on 15 December 2003. The value of the options is determined internally using the Black-Scholes Pricing Model and are included in remuneration of a proportionate basis from grant date to vesting date. These options vest and are exercisable over a period of 12 months, with 50% vesting and exercisable after 6 months (15 June 2004) and the other 50% vesting and exercisable after 12 months of issue (15 December 2004). These options expire after 3 years. The closing market price at the date of exercise was $0.70. The options exercised by H Brown during the year were issued on 12 November 2003. The value of the options is determined internally using the Black-Scholes Pricing Model and are included in the remuneration of a proportionate basis from grant date to vesting date. These options vest and are exercisable over a period of 12 months, with 50% vesting and exercisable after 6 months (12 May 2004) and the other 50% vesting and exercisable after 12 months of issue (12 November 2004). These options expire after 3 years. The closing market price at the date of exercise was $0.86. Value of Key Management Personnel Options Granted, Exercised and Lapsed During the Year The following table shows the value of key management personnel options granted, exercised and lapsed during the year:- Name Options Options Options Total Value Value of Percentage of Granted Exercised Lapsed of Options Options Total Granted, Included in Remuneration Exercised Remuneration for the Year and Lapsed for the Year that Consists Value at Value at Value of Options Grant Date Exercise at Time Date of Lapse $ $ $ $ $ % Mr C 215,000 175,000 - 390,000 31,868 53.91 Cowden Dr T G 215,000 - - 215,000 31,868 39.33 Elder Mr G B - - - - - - Speechly Mr H S Bottomley 215,000 - - 215,000 31,868 41.95 Mrs H - 86,000 - 86,000 16,286 14.66 Brown Mr W 950,000 - - 950,000 59,968 14.34 Foote DIRECTORS' SHAREHOLDINGS The relevant interest of each Director in the share capital of the Company shown in the Register of Directors' Shareholdings as at the date of this report are:- Director Fully paid Partly Full paid converting Executive Convertible ordinary paid cumulative share Notes shares ordinary non-participating options shares preference shares S *78,235,754 - - - - El-Raghy J *79,185,754 - - - - El-Raghy C Cowden 523,026 - - 500,000 - G - - - 250,000 - Speechly T Elder - - - 750,000 - H 3,000,000 - - 500,000 - Bottomley *The total shares held by Mr S El-Raghy and Mr J El-Raghy arise due to them both being directors/trustees of the following personally related entities: - Nordana Pty Ltd 4,990,668 shares - Nordana Pty Ltd 17,595,714 shares - El-Raghy Kriewaldt Pty Ltd 55,299,372 shares - S & M El-Raghy 350,000 shares The balance of 950,000 shares are held by Mr J El-Raghy being a director of Montana Realty Pty Ltd Since the end of the previous financial year no Director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by Directors shown in the consolidated accounts) because of a contract made by the Company, its controlled entities or a related body corporate with the Director or with a firm of which the Director is a member, or with an entity in which the Director has a substantial interest. For further details refer to Note 22 to the financial statements. AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 The Auditor's Independence Declaration is included on page 29 of the financial report. NON-AUDI SERVICES Tax services were provided by Deloitte Touche Tohmatsu during the year as a result of the merger between Deloitte and Corporate Tax Consulting. The directors are satisfied that the provision of non-audit services, during the year, by the auditor (or by another person or firm on the auditor's behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the tax services provided did not compromise the external auditor's independence for the following reasons:- - all non-audit services have been reviewed by the Board to ensure they do not adversely affect the integrity and objectivity of the auditor; - the majority of the fees paid to Deloitte were as a result of work that had been undertaken by Corporate Tax Consulting prior to the merger; and - the nature of the non-audit services provided is not inconsistent with auditor independence requirements. Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in note 27 to the financial statements. Signed in accordance with a resolution of the directors made pursuant to s. 298 (2) of the Corporations Act 2001. On behalf of the Directors Sami El-Raghy Chairman Perth, 21 September 2006 INDEPENDENCE DECLARATION Deloitte Touche Tohmatsu A.B.N. 74 490 121 060 Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia DX 206 Tel: +61 (0) 8 9365 7000 Fax: +61 (0) 8 9365 7001 www.deloitte.com.au The Board of Directors Centamin Egypt Limited 57 Kishorn Road Mt Pleasant WA 6153 21 September 2006 Dear Board Members Centamin Egypt Limited In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Centamin Egypt Limited. As lead audit partner for the audit of the financial statements of Centamin Egypt Limited for the financial year ended 30 June 2006, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. Yours sincerely DELOITTE TOUCHE TOHMATSU Keith Jones Partner Chartered Accountants CORPORATE GOVERNANCE STATEMENT The Board of Directors of Centamin Egypt Limited is responsible for the corporate governance of the consolidated entity. The Board guides and monitors the business and affairs of Centamin Egypt Limited on behalf of the shareholders by whom they are elected and to whom they are accountable. To ensure the Board is well equipped to discharge its responsibilities it has established guidelines for the nomination and selection of Directors and for the operation of the Board. Unless disclosed below, the best practice recommendations of both the ASX Corporate Governance Council and the AIM Listing Rules (The Alternative Investment Market of the London Stock Exchange), including the Combined Code On Corporate Governance have been applied for the entire financial year ended 30 June 2006. Where there has been any variation from the recommendations it is because the Board believes that the Company is not as yet of a size, nor are its financial affairs of such complexity to justify some of those recommendations and as such those practices continue to be the subject of the scrutiny of the full Board. Board Composition: The Board comprises six Directors, of whom the Chairman and the Managing Director/CEO are the only Executive Directors. Both the ASX Listing Rules and the Combined Code on Corporate Governance favour that the Chairman be an independent Director, however as Mr Sami El-Raghy has been primarily based in Egypt during this stage of the Company's development, where his knowledge of the Company's projects, the Egyptian language, culture and government contacts are invaluable, the Board believe that his role and status be both as an Executive and as Chairman. The skills, experience and expertise relevant to the position of each Director who is in office at the date of the annual report, their attendances at meetings and their term of office are detailed in the Directors' Report. The majority of the Board are independent Directors, the names of the Directors of the Company in office at the date of this statement are: Name Position Committees Sami El-Raghy Chairman - Executive Director - Josef El-Raghy Managing Director/CEO - Colin N Cowden Independent Director Audit and Remuneration G Brian Speechly Independent Director Audit and Remuneration Thomas G Elder Independent Director - H Stuart Bottomley Independent Director - When determining whether a Director is independent, the Board has determined that the Director must not be an Executive and: â€¢ is not a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder of the Company; â€¢ within the last three years has not been employed in an executive capacity by the Company or another group member, or been a Director after ceasing to hold any such employment; â€¢ within the last three years has not been a principal or employee of a material professional adviser or a material consultant to the Company or another group member, or an employee materially associated with the service provided; â€¢ is not a material supplier or customer of the Company or other group member, or an officer of or otherwise associated directly or indirectly with a significant supplier or customer; â€¢ has no material contractual relationship with the Company or another group member other than as a Director of the Company; â€¢ is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the Director's ability to act in the best interests of the Company. Independent Directors have the right to seek independent professional advice in the furtherance of their duties as Directors, at the Company's expense. Written approval must be obtained from the Managing Director prior to incurring expenses on behalf of the Company. S El-Raghy, J El-Raghy, C Cowden and G B Speechly are also Directors of the wholly owned subsidiary companies, Pharaoh Gold Mines NL, Viking Resources Ltd, and North African Resources NL. J El-Raghy and T Elder are also Directors of the subsidiary Company, Centamin Limited. The Board and Board Nominations: The Company does not presently operate a nomination committee however as the Company approaches the development of the Sukari project and as it shifts its corporate profile increasingly towards the capital markets of Europe, the Board is establishing guidelines for the future nomination and selection of potential new directors. In the interim, the full Board (subject to members voting rights in general meeting) is responsible for selection of new members and has regard to a candidate's experience and competence in areas such as mining, exploration, geology, finance and administration that can assist the Company in meeting its corporate objectives and plans. Under the Company's Constitution: â€¢ the maximum number of Directors on the Board is ten; â€¢ a Director (other than the Managing Director) may not retain office for more than three years without submitting for re-election; and â€¢ at the Annual General Meeting each year effectively one third of the Directors in office (other than the Managing Director) retire by rotation and must seek re-election by shareholders. Securities Trading Policy: The Company has not as yet adopted a formal securities trading policy however the Directors and employees are restricted from acting on material information until it has been released to the market in accordance with the ASX requirements of continuous disclosure. Furthermore the ability of Directors and certain employees of AIM listed companies to deal in the Company's securities is restricted in a number of ways, by statute, common law and by Rule 21 of the AIM Rules. This rule imposes restrictions beyond those imposed by law in that the Directors and certain employees and persons connected with them do not abuse and do not place themselves under suspicion of abusing price-sensitive information that they have or are thought to have, especially in periods leading up to announcement of results (close periods). Remuneration Committee and Policies: The Remuneration Committee comprises Mr Colin Cowden and Mr Brian Speechly, both independent Directors. All compensation arrangements for Directors and Senior Executives are determined by the Remuneration Committee and approved by the Board, after taking into account the current competitive rates prevailing in the market. The amount of remuneration for all Directors including the full remuneration packages, comprising all monetary and non-monetary components of the Executive Directors and Executives, are detailed in the Directors' Report. All Executives receive base salary, superannuation, fringe benefits and in some cases, performance incentives. Executives and staff, if invited by the Board of Directors, may participate in the Employee Share Option Plan. These packages are reviewed on an ongoing basis and in most cases are reviewed against predetermined performance criteria. All remuneration paid to executives is valued at the cost to the Company and is measured in accordance with the applicable accounting standards. Shares issued to Executives are valued as the difference between the market price of those shares and the amount paid by the Executive. Options are valued using the Black-Scholes methodology. The Board expects that the remuneration structure that is implemented will result in the Company being able to attract and retain the best Executives to manage the economic entity. It will also provide the Executives with the necessary incentives to work to grow long-term shareholder value. The Board can exercise its discretion in relation to approving incentives, bonuses and options and can recommend changes to the Committee's recommendations. There are no schemes for retirement benefits other than statutory superannuation for independent Directors. External auditors: The auditors of the Company, Deloitte Touche Tohmatsu ('Deloitte'), have open access to the Board of Directors at all times. Deloitte have audited the Company and its subsidiaries for a number of years and have adopted a policy of rotating audit partners every five years. The last rotation of the audit partner occurred during the financial year ended 30 June 2003. Deloitte do attend the Company's Annual General Meeting and it is consistent with their current business practice, and is in accordance with s250RA of the Corporations Act 2001. Audit committee: The Audit Committee comprises Mr Colin Cowden and Mr Brian Speechly, both independent Directors. The Company has a duly constituted Audit Committee which comprises the two Australia based independent Directors whose names, qualifications and attendances are included in the Directors' Report. The responsibilities of the Audit Committee are laid out in its terms of reference, and amongst other things, includes the responsibility to ensure that an effective internal control framework exists within the entity, to produce half year and annual financial statements. This includes the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as well as non-financial considerations. Managing risks: The Board meets regularly to evaluate, control, review and implement the Company's operations and objectives. Regular controls established by the Board include: â€¢ detailed monthly financial reporting; â€¢ delegation of authority to the Managing Director to ensure approval of expenditure obligations; â€¢ implementation of operating plans, cash flows and budgets by management and Board monitoring of progress against projections; and â€¢ procedures to allow Directors, and management in the furtherance of their duties, to seek independent professional advice via the utilisation of various external technical consultants. The Board recognises the need to identify areas of significant business risk and to develop and implement strategies to mitigate these risks. Commitment to stakeholders & ethical standards: The Board supports the highest standards of corporate governance and requires its members and the management and staff of the Company to act with integrity and objectivity in relation to: â€¢ Compliance with laws and regulations affecting the Company's operations; â€¢ The ASX's Corporate Governance and the AIM Rules, including the Combined Code On Corporate Governance; â€¢ Employment practices; â€¢ Responsibilities to the community; â€¢ Responsibilities to the individual; â€¢ The environment; â€¢ Conflict of interests; â€¢ Confidentiality; â€¢ Ensure that shareholders and the financial community are at all times fully informed in accordance with the spirit and letter of the ASX's continuous disclosure requirements and the AIM Rules; â€¢ Corporate opportunities or opportunities arising from these for personal gain or to compete with the Company; â€¢ Protection of and proper use of the Company's assets; and â€¢ Active promotion of ethical behaviour. Monitoring of the Board's Performance and Communication to Shareholders: In order to ensure that the Board continues to discharge its responsibilities in an appropriate manner, the performance of all Directors is constantly reviewed by the Chairman. The Company does not presently have an evaluation of the Board and all the Board members performed by an independent consultant however it may do so once the Company commences development of the Sukari project. The Board of Directors aims to ensure that the shareholders, on behalf of whom they act, are informed of all information necessary to assess the performance of the Directors. Information is communicated to the shareholders through: â€¢ the Annual Report which is distributed to all shareholders; â€¢ the availability of the Company's Quarterly Report to shareholders so requesting; â€¢ the Half-Yearly Report distributed to shareholders so requesting; â€¢ adherence to continuous disclosure requirements; â€¢ the Annual General Meeting and other meetings so called to obtain shareholder approval for Board action as appropriate; and â€¢ the provision of the Company's website containing all of the above mentioned reports and its constant update and maintenance. Statement by the Managing Director and Company Secretary The Managing Director and Company Secretary confirm to the board that the group's financial position presents a true and fair view and that the financial statements are founded on a sound system of risk management, internal compliance and control. Further, it is confirmed that the groups risk management and internal compliance is operating efficiently and effectively. INDEPENDENT AUDIT REPORT TO THE MEMBERS OF CENTAMIN EGYPT LIMITED General Purpose Financial Report, Consolidated Entity, Corporations Act 2001 Deloitte Touche Tohmatsu A.B.N. 74 490 121 060 Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia DX 206 Tel: +61 (0) 8 9365 7000 Fax: +61 (0) 8 9365 7001 www.deloitte.com.au Scope The financial report and directors' responsibility The financial report comprises the balance sheet, income statement, cash flow statement, statement of changes in equity, a summary of significant accounting policies and other explanatory notes and the directors' declaration for both Centamin Egypt Limited (the company) and the consolidated entity, for the financial year ended 30 June 2006 as set out on pages 36 to 66. The consolidated entity comprises the company and the entities it controlled at the year's end or from time to time during the financial year. The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with Accounting Standards in Australia and the Corporations Act 2001. This includes responsibility for the maintenance of adequate financial records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report. Audit approach We have conducted an independent audit of the financial report in order to express an opinion on it to the members of the company. Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal controls, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected. We performed procedures to form an opinion whether, in all material respects, the financial report is presented fairly in accordance with Accounting Standards in Australia and the Corporations Act 2001 so as to present a view which is consistent with our understanding of the company's and the consolidated entity's financial position, and performance as represented by the results of their operations, their changes in equity and their cash flows. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates made by the directors. While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls. The audit opinion expressed in this report has been formed on the above basis. Audit Opinion In our opinion, the financial report of Centamin Egypt Limited is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the company's and consolidated entity's financial position as at 30 June 2006 and of their performance for the year ended on that date; and (b) complying with Accounting Standards in Australia and the Corporations Regulations 2001. DELOITTE TOUCHE TOHMATSU Keith Jones Partner Chartered Accountants Perth, 21 September 2006 DIRECTORS' DECLARATION The directors declare that: a) The attached financial statements and notes thereto comply with Accounting Standards; b) The attached financial statements and notes thereto give a true and fair view of the financial position and performance of the Company and the consolidated entity; c) In the directors' opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001; and d) In the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. e) The directors have given the declarations required by s.295A of the Corporations Act 2001. Signed in accordance with a resolution of the directors made pursuant to s. 295 (5) of the Corporations Act 2001. On behalf of the Directors Sami El-Raghy Chairman Perth, 21 September 2006 INCOME STATEMENT for the FINANCIAL YEAR ENDED 30 JUNE 2006 Consolidated Company Note 2006 2005 2006 2005 $ $ $ $ Revenue 2 1,140,700 1,046,309 1,110,710 1,046,137 Other income 2 - 102,351 1,196,597 538,934 Administration expenses (1,580,463) (1,195,831) (1,561,734) (1,264,190) Foreign exchange gain/(loss) 2 2,011,921 (543,942) 2,065,253 (562,767) Marketing expenses (218,531) (145,044) (218,531) (144,044) Travelling (337,132) (108,371) (337,132) (108,371) expenses Other expenses (5,665) (25,884) - - -------- -------- -------- -------- Profit/(Loss) Before Income Tax 1,010,830 (870,412) 2,255,163 (494,301) Tax (expense)/income 3 - - - - -------- -------- -------- -------- Net Profit/(Loss) for the period 1,010,830 (870,412) 2,255,163 (494,301) ======== ======== ======== ======== Earnings Per Share: Basic (cents per share) 30 0.194 (0.16) Diluted (cents per share) 30 0.192 (0.16) BALANCE SHEET AS AT 30 JUNE 2006 Consolidated Company Note 2006 2005 2006 2005 $ $ $ $ CURRENT ASSETS Cash and cash equivalents 54,493,427 17,984,972 53,966,456 17,907,208 Trade and other receivables 5 183,004 298,118 114,243 8,956 Prepayments 6 113,399 114,527 28,206 22,206 --------- --------- --------- --------- Total current assets 54,789,830 18,397,617 54,108,905 17,938,370 --------- --------- --------- --------- NON-CURRENT ASSETS Trade and other receivables 5 - - 40,734,980 27,511,390 Plant and equipment 7 1,070,101 1,178,079 83,588 57,235 Investments 8 - - 5,511,169 5,511,169 Exploration expenditure 9 41,388,637 28,715,883 330,821 330,821 --------- --------- --------- --------- Total non-current assets 42,458,738 29,893,962 46,660,558 33,410,615 --------- --------- --------- --------- Total assets 97,248,568 48,291,579 100,769,463 51,348,985 CURRENT LIABILITIES Trade and other accounts payable 10 861,259 232,549 141,651 69,748 Provisions 11 325,929 234,092 42,447 166,049 --------- --------- --------- --------- Total current liabilities 1,187,188 466,641 184,098 235,797 --------- --------- --------- --------- NON-CURRENT LIABILITIES Trade and other accounts payable 10 205,448 196,850 - - --------- --------- --------- --------- Total non-current liabilities 205,448 196,850 - - --------- --------- --------- --------- Total liabilities 1,392,636 663,491 184,098 235,797 --------- --------- --------- --------- Net assets 19 95,855,932 47,628,088 100,585,365 51,113,188 ========= ========= ========= ========= EQUITY Contributed equity 12 115,344,046 68,602,890 115,344,046 68,602,890 Reserves 13 3,339,601 2,872,791 3,939,601 3,472,791 Accumulated losses 14 (22,827,715) (23,847,593) (18,698,282) (20,962,493) --------- --------- --------- --------- Total equity 95,855,932 47,628,088 100,585,365 51,113,188 ========= ========= ========= ========= STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2006 Issued General Share Accumulated Total Capital Reserve Options Losses Reserve $ $ $ $ $ -------- -------- ------- -------- -------- BALANCE AT 1 JUL 04 68,568,240 2,809,287 - (22,977,181) 48,400,346 -------- -------- ------- -------- -------- Loss for the period - - - (870,412) (870,412) Net income - - - - - recognised -------- -------- ------- -------- -------- directly in equity Total recognised income and expense for the year - - - (870,412) (870,412) -------- -------- ------- -------- -------- Share options exercised 34,650 - - - 34,650 Cost of share based payments - - 63,504 - 63,504 -------- -------- ------- -------- -------- BALANCE AT 01 JUL 05 68,602,890 2,809,287 63,504 (23,847,593) 47,628,088 -------- -------- ------- -------- -------- Profit for the period - - - 1,010,830 1,010,830 Net income - - - - - recognised -------- -------- ------- -------- -------- directly in equity Total recognised income and expense for the year - - - 1,010,830 1,010,830 -------- -------- ------- -------- -------- Share options exercised 339,183 - - - 339,183 Cost of share based payments - - 475,858 - 475,858 Placement of 75,000,000 shares @ 27.5p 46,401,973 - - 46,401,973 Transfer to retained earnings - - (9,048) 9,048 - -------- -------- ------- -------- -------- BALANCE AT 30 JUN 06 115,344,046 2,809,287 530,314 (22,827,715) 95,855,932 -------- -------- ------- -------- -------- CASH FLOW STATEMENT for the FINANCIAL YEAR ENDED 30 JUNE 2006 Consolidated Company Note 2006 2005 2006 2005 $ $ $ $ CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 56,920 54,599 56,920 54,599 Receipts from subsidiaries - - 1,196,597 538,934 Payments to suppliers and employees (730,882) (1,598,837) (2,211,579) (1,473,840) Interest 1,140,700 1,046,309 1,110,710 1,046,137 received -------- -------- -------- -------- Net cash generated by/(used in) operating activities 21 466,738 (497,929) 152,648 165,830 -------- -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Payment for plant (514,614) (1,184,490) (49,834) (46,910) and equipment Sale of plant and - 930,439 - 30,778 equipment Advances to subsidiaries - - (13,223,591) (2,879,425) Payments for exploration & evaluation (12,858,833) (2,053,071) - - -------- -------- -------- -------- Net cash used in investing (13,373,447) (2,307,122) (13,273,425) (2,895,557) activities -------- -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the conversion of 339,183 34,650 339,183 34,650 options Proceeds from issues of 49,588,737 - 49,588,737 - shares Share issue (3,186,764) - (3,186,764) - costs -------- -------- -------- -------- Net cash provided by financing 46,741,156 34,650 46,741,156 34,650 activities -------- -------- -------- -------- Net increase/ (decrease) in cash and 33,834,447 (2,770,401) 33,620,379 (2,695,077) cash equivalents Effect of exchange rate changes on the balance of cash held in foreign currencies 2,674,008 (468,087) 2,438,869 (499,263) Cash and cash equivalents at the beginning of the financial 17,984,972 21,133,460 17,907,208 21,101,548 year -------- -------- -------- -------- Cash and cash equivalents at the end of the financial year 21 54,493,427 17,984,972 53,966,456 17,907,208 ======== ======== ======== ======== This information is provided by RNS The company news service from the London Stock Exchange

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