Interim Results
Kefi Minerals plc
26 March 2007
AIM: KEFI 26 March 2007
KEFI Minerals Plc
('KEFI Minerals' or 'the Company')
Interim Results for the period ended 31 December 2006
KEFI Minerals, the gold and copper exploration company with projects in Turkey
and Bulgaria, is pleased to announce interim results for the period ended 31
December 2006.
HIGHLIGHTS
•KEFI Minerals now has four projects in Turkey (following the addition of
Derenin Tepe and Karalar in February 2007), while it also has one project in
Bulgaria;
•The Company owns an extensive exploration database which contains
information regarding approximately 100 further prospective sites in Turkey;
and
•Since admission to AIM in December 2006, the Company has established
field offices in Turkey and exploration has begun.
KEFI Minerals' Managing Director, Jeff Rayner, commented: 'The primary objective
for 2007 is to rapidly assess the Company's current projects and to identify the
most prospective areas in Turkey and Bulgaria for further evaluation.
'We will continue to monitor the exploration licence status of geologically
prospective areas on an ongoing basis so that KEFI Minerals can acquire further
exploration opportunities as soon as they become available. We look forward to
further growing our portfolio and updating shareholders in due course.'
Enquiries
KEFI Minerals WH Ireland Bishopsgate Communications
Jeffrey Rayner Laurie Beevers Maxine Barnes
Katy Mitchell Nick Rome
+905 36963 0111 +44 161 832 2174 +44 20 7562 3350
www.kefi-minerals.com
CHAIRMAN'S STATEMENT
I am pleased to present our first set of interim results for the period ended 31
December 2006. KEFI Minerals Plc was formed on 24 October 2006 and commenced
trading on AIM (Code 'KEFI') on 18 December 2006 following the successful
placing of 46,666,667 shares at 3p to raise £1.4 million.
The Company has since made good progress, developing its portfolio and raising
further funds which will be used by KEFI Minerals to continue to expand and
progress its gold and copper exploration assets in Turkey and Bulgaria in 2007.
Finance
The Company acquired the interests of EMED Mining Public Limited's ('EMED
Mining') in Turkey and Bulgaria. EMED Mining retains a 34% interest in KEFI
Minerals and has agreed to provide technical and administrative systems and
personnel on a cost-recovery basis.
Since the end of the financial period, we are delighted to have raised a further
£350,000 by way of a placement in February 2007 of 11,666,667 ordinary shares at
3p. In addition, trade debtors and trade creditors as at 31 December,
principally associated with the admission to AIM on 18 December 2006, have been
settled.
The Company's accounting policy is conservative. All expenditure is written off
until the Board decides to commence development of a project, from which point
development costs would be capitalized.
Exploration Strategy
KEFI Minerals' exploration assets comprise exploration licences in Turkey and
Bulgaria and the ownership of a database containing information about further
prospective sites in Turkey. The growth strategy will focus on continuing to
develop portfolios in those areas as the Company utilizes its exploration
database and strong domestic relationships.
In Turkey, KEFI Minerals now has four projects (following the addition of
Derenin Tepe and Karalar in February 2007), while it also has one project in
Bulgaria. Both Turkey and Bulgaria are well established mining countries with
supportive governments.
Moving forward we hope to continue to take advantage of recent changes to the
Turkish Mining Law and the progressive development attitude of the Turkish
Government, which have generated a current positive environment for exploration
and mining activities.
Recent progress on structural reforms in Bulgaria has led to an improved
business environment since 2000 and an increase in foreign investment. It joined
the European Union in January 2007.
Our exploration strategy for operating in Turkey and Bulgaria is based on the
following concepts:
•selecting areas within prospective stratigraphic and structural settings
with a high potential for base metal or gold mineralisation;
•acquisition of exploration licences are inexpensive to acquire and
explore;
•exploring projects as a package rather than individual isolated
prospects;
•rapidly identifying, prioritising and assessing targets;
•rapidly progressing targets for further work or relinquish the licences;
•utilising existing contacts and knowledge developed by EMED Mining;
•creating new contacts and further developing knowledge using an
established local team; and
•utilising technical, commercial and political support from EMED Mining as
required.
KEFI Minerals owns an extensive exploration database which contains information
regarding approximately 100 further prospective sites in Turkey. This database
provides a competitive advantage in identifying prospective areas for project
generation in Turkey.
Monitoring of the exploration licence status of geologically prospective areas
will be carried out on an ongoing basis so that KEFI Minerals can acquire
further exploration opportunities as soon as they become available.
Exploration To Date
Since admission to AIM in December 2006, the Company has established field
offices in Turkey and exploration has begun. KEFI Minerals now has four
exploration projects, having already added two new areas since admission to AIM:
• At Artvin, areas of extensive hydrothermal alteration have been
recognised in the project area, and there is evidence of historical workings
indicating potential for economic mineralisation.
• At Gumushane, areas of extensive hydrothermal alteration have been
recognised in the project area, as well as coincident areas of interest
identified through interpretation of Aster data.
• At Derenin Tepe (granted February 2007) in the Western Anatolia Region,
epithermal quartz veins have been identified with gold and silver
mineralisation. This licence covers an area of 12 sq km and hosts a series
of parallel quartz veins that trend northwest and extend for at least one
kilometre.
• At Karalar (granted February 2007) in Central Anatolia, highly anomalous
gold in stream sediments, draining from an area of granite intrusion and in
an area of historic base metal mines.
In southern Bulgaria, reconnaissance work in the Lehovo Project area has
identified a structural corridor with a strike length of approximately eight
kilometres with the potential for gold and base metal mineralisation.
KEFI Minerals is targeting large epithermal gold or porphyry gold-copper systems
analogous to several +1 million ounce deposits recently discovered and developed
in the Western Anatolia Region of Turkey.
Outlook for 2007
The Company has established itself quickly. Since Admission to AIM it has opened
a field office in Turkey, started field work and added two new exploration
licences to its portfolio.
The primary objective for 2007 is to rapidly assess the Company's current
projects and to identify the most prospective areas in Turkey and Bulgaria for
further evaluation. We will continue to monitor the exploration licence status
of geologically prospective areas on an ongoing basis so that KEFI Minerals can
acquire further exploration opportunities as soon as they become available. We
look forward to further growing our portfolio and updating shareholders in due
course.
Harry Anagnostaras-Adams
Chairman
References in this report to exploration results and potential have been
approved for release by Mr Jeff Rayner, B.Sc. (Honours). Mr Rayner is a
geologist and has more than 20 years' relevant experience in the field of
activity concerned. He is a member of The Australian Institute of Mining and
Metallurgy (AUSIMM) and has consented to the inclusion of the material in the
form and context in which it appears.
KEFI MINERALS PLC
BOARD OF DIRECTORS AND OTHER OFFICERS
Board of Aristidis Eleftherios Anagnastoras-Adams Non executive -
Directors: Chairman
Jeffrey Guy Rayner Managing Director
Ian Rutherford Plimer Non executive Director
John Edward Leach Finance Director
Company Secretary: Cargil Management Services Limited
22 Melton Street
London
NW1 2WB
Registered Office: 27/28 Eastcastle Street
London
W1W 8DH
Auditors: Moore Stephens Stylianou & Co
Iris Tower, Office 602
58 Arch. Makarios III Avenue
P. O. Box 24656
2132 Nicosia, Cyprus
KEFI MINERALS PLC
REPORT OF THE BOARD OF DIRECTORS
The Board of Directors presents its report together with the condensed interim
consolidated financial statements of KEFI Minerals plc (the 'Company') and its
subsidiaries (the 'Group') for the period from 24 October 2006 to 31 December
2006.
Principal activities
The principal activities of the Group for the period are:
• To explore for mineral deposits of precious and base metals and other
minerals that appear capable of commercial exploitation, including
topographical, geological, geochemical and geophysical studies and
exploratory drilling.
• To evaluate mineral deposits determining the technical feasibility and
commercial viability of development, including the determination of the
volume and grade of the deposit, examination of extraction methods,
infrastructure requirements and market and finance studies.
• To develop, operate mineral deposits and market the metals produced.
Results
The Group's results for the year are set out on page 7.
The Group's future operational success depends, mainly, on the following
factors:
• The discovery of economically viable mineral deposits and the
availability of subsequent funding to extract the resources.
• The availability of subsequent funding to extend the Company's
exploration activities.
Share capital
There were no changes in the share capital of the Company.
Future developments
The strategic objectives for 2007 are to select the best target areas in Turkey
and Bulgaria for further exploration and drill as soon as targets are
sufficiency defined.
Subsequent events
No events have arisen since the end of the financial period that have
significantly affected the operations of the Group, other than the settlement of
trade debtors and trade creditors principally associated with the admission to
AIM on 18 December 2006.
Board of Directors
The Directors of the Company as at 31 December 2006 and at the date of this
report are shown on page 5. The Directors were members of the Board throughout
the period from 24 October 2006 to 31 December 2006.
There were no significant changes in the responsibilities and remuneration of
the Directors.
By order of the Board,
Nicosia, 21 March 2007
KEFI MINERALS PLC
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM 24 OCTOBER 2006 TO 31 DECEMBER 2006
Note 24.10.06-
------ -----------
31.12.06
----------
GBP'000
Exploration costs (122)
Share-based benefits (79)
________
(Loss) before tax 4 (201)
Taxation -
________
(Loss) after tax (201)
=======
KEFI MINERALS PLC
CONDENSED BALANCE SHEET
31 DECEMBER 2006
Notes The Group The Company
------- ----------- -------------
2006 2006
------ ------
GBP'000 GBP'000
ASSETS
Non current assets
Goodwill 13 366 -
Investment in subsidiaries 7 - 2
________ ________
366 2
________ ________
Current assets
Trade and other receivables 8 1,420 1,892
Bank and cash balances 11 128 122
________ ________
1,548 2,014
________ ________
Total assets 1,914 2,016
======= =======
EQUITY AND LIABILITIES
Capital and reserves
Share capital 9 887 887
Other reserves 459 561
________ ________
1,346 1,448
________ ________
Current liabilities
Trade and other payables 10 568 568
________ ________
Total liabilities 568 568
________ ________
Total equity and liabilities 1,914 2,016
======= =======
On 21 March 2007, the Board of Directors of KEFI Minerals plc authorised these
financial statements for issue.
KEFI MINERALS PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD FROM 24 OCTOBER 2006 TO 31 DECEMBER 2006
Share Share Accumulated Share Exchange Total
capital premium losses Options Difference
Reserve Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Issue of share
capital 887 969 - - 1,856
Share issue costs - (383) - - (383)
Loss for the period - - (201) - (201)
Exchange difference
on translation
of subsidiaries - - - (5) (5)
Recognition of
share-based payments 79 79
________ _______ _______ _______ ________ _______
Balance at
31 December 2006 887 586 (201) 79 (5) 1,346
======= ====== ====== ====== ======= ======
KEFI MINERALS PLC
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD FROM 24 OCTOBER 2006 TO 31 DECEMBER 2006
Notes 24.10.06-
------- -----------
31.12.06
----------
GBP'000
Cash flows from operating activities
(Loss) for the period (201)
Share-based benefits 79
Exchange difference on translation of subsidiaries (5)
_________
Operating loss before working capital changes (127)
Changes in working capital:
Trade and other receivables (1,420)
Trade and other payables 532
_________
Net cash from operations (1,015)
_________
Cash flows form investing activities:
Acquisition of subsidiaries 13 (330)
_________
Net cash used in investing activities (330)
_________
Cash flows from financing activities:
Proceeds from issue of share capital 1,856
Share issue and listing costs (383)
_________
Net cash from financing activities 1,473
_________
Net decrease in cash 128
Cash at beginning of period -
_________
Cash at end of period 128
========
KEFI MINERALS PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 24 OCTOBER 2006 TO 31 DECEMBER 2006
1. General information
Country of incorporation
The Company was incorporated in United Kingdom as a public limited company on 24
October 2006. Its registered office is at 27/28 Eastcastle Street, London W1W
8DH.
Principal activities
The principal activities of the Group for the period are:
• To explore for mineral deposits of precious and base metals and other
minerals that appear capable of commercial exploitation, including
topographical, geological, geochemical and geophysical studies and
exploratory drilling.
• To evaluate mineral deposits determining the technical feasibility and
commercial viability of development, including the determination of the
volume and grade of the deposit, examination of extraction methods,
infrastructure requirements and market and finance studies.
• To develop, operate mineral deposits and market the metals produced.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these condensed
interim consolidated financial statements are set out below. These policies have
been consistently throughout the period presented in these financial statements
unless otherwise stated.
Basis of preparation
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRs) as adopted by the EU and
International Financial Reporting Standards (IFRs) as issued by the IASB. The
financial statements comply with both these reporting frameworks because at the
time of their preparation all applicable IFRs issued by the IASB have been
adopted by the EU through the endorsement procedure established by the European.
The financial statements have been prepared under the historical cost
convention.
The preparation of financial statements in conformity with IFRs as adopted by
the EU requires the use of certain critical accounting estimates and requires
management to exercise its judgement in the process of applying the Company's
accounting policies. It also requires the use of assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Although these estimates
are based on management's best knowledge of current events and actions, actual
results ultimately may differ from those estimates.
Adoption of new and revised IFRSs
As from 24 October 2006, the Group adopted all the IFRSs and International
Accounting Standards (IAS), which are relevant to its operations.
The adoption of these standards did not have a material effect on the
consolidated financial statements.
At the date of authorisation of these financial statements some standards were
in issue but not yet effective. The Board of Directors expects that the adoption
of these standards in future periods will not have a material effect on the
consolidated financial statements of the Group.
Consolidation
The Group consolidated financial statements comprise of the financial statements
of the parent company KEFI Minerals plc and the financial statements of the
following subsidiaries:
Company name Date of Country of % of
-------------- --------- ------------ ------
acquisition incorporation shareholding
------------- --------------- --------------
Mediterranean Minerals (Bulgaria)
EOOD 8/11/06 Bulgaria 100%-Direct
Dogu Akdeniz Mineralleri Ltd 8/11/06 Turkey 100%-Indirect
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up to
31 December each year. Control is achieved where the Company has power to govern
the financial and operating policies of an entity so as to obtain benefits from
its activities.
The financial statements of all the Group companies are prepared using uniform
accounting policies. All intra-group transactions, balances, income and expenses
are eliminated of consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The
cost of the acquisition is measured at the aggregate of the fair values, at the
date of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree, plus
any costs directly attributable to the business combination. The acquiree's
identifiable assets, liabilities and contingent liabilities that meet the
conditions for recognition under IFR 3 are recognised at their fair values at
the acquisition date, except for non-current assets (or disposal groups) that
are classified as held for sale in accordance with IFS 5 Non-Current Assets held
for sale and discontinued operations, which are recognised and measured at fair
value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and initially measured
at cost, being the excess of the cost of the business combination over the
Group's interest in the net fair value of the identifiable assets, liabilities
and contingent liabilities recognised. If, after reassessment, the Group's
interest in the net fair value of the acquiree's identifiable assets,
liabilities and contingent liabilities exceeds the cost of the business
combination, the excess is recognised immediately in profit or loss.
The interest of minority shareholders in the acquiree is initially measured at
the minority's proportion of the net fair value of the assets, liabilities and
contingent liabilities recognised.
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value
of the Group's share of the net identifiable assets of the acquired undertaking
at the date of acquisition. Goodwill on acquisition of subsidiaries is included
in 'intangible assets'. Goodwill on acquisitions of associates is included in
'investments in associates'.
Goodwill is tested annually for impairment and carried at cost less accumulated
impairment losses. Gains and losses on the disposal of an undertaking include
the carrying amount of goodwill relating to the undertaking sold. Goodwill is
allocated to cash generating units for the purpose of impairment testing.
Any excess of the interest in the net fair value of acquiree's identifiable
assets, liabilities and contingent liabilities over cost is recognised
immediately in the profit and loss.
Revenue recognition
Revenue comprises of the amounts receivable from exploration tenements,
technical data, precious and base metals sold.
The Group had no sales/revenue during the year under review.
Exploration costs
The Group adopted the provisions of IFRS6 'Exploration for and Evaluation of
Mineral Resources'. The Group's stage of operations as at the year end and as at
the date of approval of these financial statements have not yet met the criteria
for capitalisation of exploration costs.
Foreign currency translation
(1) Measurement currency
The financial statements are prepared in British Pounds (measurement currency)
which is the currency that best reflects the economic substance of the
underlying events and circumstances relevant to the Company.
(2) Transactions and balances
Foreign currency transactions are translated into the measurement currency using
the exchange rates prevailing at the date of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the income
statement.
Tax
Income tax expense represents the sum of the tax currently payable and deferred
tax.
Current tax liabilities and assets for the current and prior periods are
measured at the amount expected to be paid to or recovered from the taxation
authorities, using the tax rates and laws that have been enacted, or
subsequently enacted, by the balance sheet date.
Deferred tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. Deferred tax is determined using
tax rates and laws that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the related deferred tax asset
is realised or the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be
utilised.
Share capital
Ordinary shares are classified as equity.
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise
of cash in hand and balances with banks.
3. Financial risk management
Financial risk factors
The Company's activities expose it to currency risk arising from the financial
instruments it holds. The risk management policies employed by the Company to
manage the risk are discussed below:
Currency risk
Currency risk is the risk that the value of financial instruments will fluctuate
due to changes in foreign exchange rates. Currency risk arises when future
commercial transactions and recognised assets and liabilities are denominated in
a currency that is not the Company's measurement currency. The Company is
exposed to foreign exchange risk arising from various currency exposures
primarily with respect to the Euro, Bulgarian Lev and Turkish Lira.
The Group's management monitors the exchange rate fluctuations on a continuous
basis and acts accordingly.
Fair values
The fair values of the Groups financial assets and liabilities approximate their
carrying amounts at the balance sheet date.
4. Operating profit/(loss)
The following items have been included in arriving at operating (loss):
2006
------
GBP'000
Recognition of share-based benefits 79
Professional services 3
=======
5. Tax
Due to tax losses sustained in the period, no tax liability arises on the Group.
Under current legislation, tax losses may be carried forward and be set off
against taxable income of the following years. As at 31 December 2006, the
balance of tax losses which is available for offset against future taxable
profits amounts to GBP201,264.
The Company is anticipated that it will be resident in Cyprus for tax purposes.
Cyprus
The corporation tax rate is 10%. Under certain conditions interest may be
subject to defence contribution at the rate of 10%. In such cases 50% of the
same interest will be exempt from corporation tax, thus having an effective tax
rate burden of approximately 15%. In certain cases, dividends received from
abroad may be subject to defence contribution at the rate of 15%.
Tax Loss Schedule
Tax year Tax Losses Compensation Tax Losses Carried Forward
---------- ------------ -------------- ---------------------
GBP GBP GBP
2006 25,761 - 25,761
Bulgaria
Mediterranean Minerals (Bulgaria) EOOD, the 100% subsidiary of the Company, is
resident in Bulgaria for tax purposes.
The corporation tax rate is 15%. Due to tax losses sustained in the period, no
tax liability arises on the Mediterranean Minerals (Bulgaria) EOOD. Under
current legislation, tax losses may be carried forward and be set off against
taxable income of the following five years. As at 31 December 2006, the balance
of tax losses which is available for offset against future taxable profits
amounts to GBP2,257.
Tax Loss Schedule
Tax year Tax Losses Compensation Tax Losses Carried Forward
---------- ------------- -------------- ----------------
GBP GBP GBP
2005 110,772 - 110,772
2006 39,734 - 39,734
Turkey
Dogu Akdeniz Mineralleri Ltd, the 100% subsidiary of Mediterranean Minerals
(Bulgaria) EOOD, and ultimately 100% subsidiary of the Company, is resident in
Turkey for tax purposes.
The corporation tax rate is 20%.
Due to tax losses sustained in the period, no tax liability arises on the Dogu
Akdeniz Mineralleri Ltd. Under current legislation, tax losses may be carried
forward and be set off against taxable income of the following five years. As at
31 December 2006, the balance of tax losses which is available for offset
against future taxable profits amounts to GPB24,882 (2005: GBP9,555).
Tax Loss Schedule
Tax year Tax Losses Compensation Tax Losses Carried Forward
---------- ------------ -------------- ----------------
GBP GBP GBP
2005 9,555 - 9,555
2006 15,327 - 15,327
6. Deferred tax
No provision for deferred taxation has been made as there are no differences
between the amounts attributed to assets and liabilities for tax purposes and
their corresponding carrying amounts in the balance sheet.
7. Investment in subsidiaries
On 8 November 2006, the Company entered into an agreement to acquire form EMED
Mining Public Limited (formerly Eastern Mediterranean Resources Public Limited)
the whole of the issued share capital of Mediterranean Minerals (Bulgaria) EOOD,
a company incorporated in Bulgaria, in consideration for the issue of 29.999.998
ordinary shares in the Company.
Mediterranean Minerals (Bulgaria) EOOD owns100% of the share capital of Dogu
Akdeniz Mineralleri Limited, a private limited liability company incorporated in
Turkey, engaging in activities for exploration and developing of natural
resources.
2006
------
The Company GBP'000
-------------
Cost of investment 2
=======
Company name Date of Country of % of
-------------- --------- ------------ ------
acquisition incorporation shareholding
------------- --------------- --------------
Mediterranean Minerals (Bulgaria)
EOOD 8/11/06 Bulgaria 100%-Direct
Dogu Akdeniz Mineralleri Ltd 8/11/06 Turkey 100%-Indirect
Significant aggregate amounts in respect of subsidiaries:
2006
------
GBP'000
Net liabilities 1 January 2006 (156)
Net loss for the period to 8 November 2006 (208)
_______
Net liabilities at 8 November 2006 (364)
Loss for the period to 31 December 2006 (91)
_______
Net liabilities at 31 December 2006 (455)
======
The movement in the net assets of subsidiaries is based on their audited
financial statements which have been prepared on the basis of International
Financial Reporting Standards (IFRSs) as adopted by the EU and the IFRSs as
issued by IASB.
8. Trade and other receivables
2006
------
The Group GBP'000
-----------
Amounts receivable from stockbroker in relation to issue of share
capital 1,400
Other amounts receivable 20
_______
1,420
======
The Company
-------------
Amounts receivable from stockbroker in relation to issue of share
capital 1,400
Other amounts receivable 20
Receivables from subsidiary undertakings 472
______
1,892
======
9. Share capital
No. of Share Share Total
-------- ------- ------- -------
shares capital premium
-------- --------- ---------
'000 '000 '000 '000
Authorised
Ordinary shares of £0,01 each 200,000 2,000 - 2,000
====== ====== ======= =======
Issued and fully paid
Seed round 42,000 420 36 456
IPO round 46,667 467 933 1,400
Share issue costs - - (383) (383)
_______ _______ ________ ________
88,667 887 586 1,473
======= ====== ======= =======
10. Other payables
2006
------
The Group and the Company GBP'000
---------------------------
Trade payables 277
Amounts due to EMED Mining Public Ltd 291
_______
568
======
11. Cash and cash equivalents
Cash included in the cash flow statement comprise the following balance sheet
amounts:
2006
------
The Group GBP'000
-----------
Bank balances and cash 128
=======
The Company
-------------
Bank balances and cash 122
=======
12. Share option plan
Details of share options outstanding as at 31 December 2006:
Grant date Expiry date Exercise price Number of shares
------------ ------------- ---------------- ------------------
GBP '000
18/12/2006 18/12/2012 0,03 16,000
No. of shares
---------------
'000
Outstanding options at 1 January 2006 16,000
-granted -
-cancelled -
-exercised -
_______
16,000
======
The Company has a share option scheme for employees and other parties of the
Group. The options expire six years after grant date and are exercisable at the
exercise price in whole or in part no more than one third form at grant date,
two thirds after one year from the grant date and the balance after two years
from the grant date.
The option agreement contain provisions adjusting the exercise price in certain
circumstances including the allotment of fully paid ordinary shares by way of a
capitalisation of the Company's reserves, a sub division or consolidation of the
ordinary shares, a reduction of share capital and offers or invitations (whether
by way of rights issue or otherwise) to the holders of ordinary shares.
12. Share option plan-cont'd
The estimated fair values of the options were calculated using the Black Scholes
option pricing model. The inputs into the model and the results are as follows:
18 Dec. 2006
--------------
Closing share price at issue date 3.88p
Weighted average exercise price 3.00p
Average expected volatility 50%
Expected life 6 yrs
Risk free rate 5.97%
Expected dividend yield Nil
Discount factor 30%
Estimated fair value 1.427p
Expected volatility was estimated based on the likely range of volatility of the
share price.
13. Acquisition of subsidiaries
On 8 November 2006, the Company entered into an agreement to acquire from EMED
Mining Public Limited (formerly Easter Mediterranean Resources Public Ltd) the
whole of the issued share capital of Mediterranean Minerals (Bulgaria) EOOD, a
company incorporated in Bulgaria, in consideration for the issue of 29.999.998
ordinary shares in the Company. This issue of shares was also partly in
satisfaction of indebtedness due to EMED Mining Public Ltd.
The consolidated net assets of Bulgaria and Turkey at the date of acquisition
and at 31 December 2005 were as follows:
8.11.06 31.12.05
--------- ----------
GBP'000 GBP'000
Cost of investment 2
Less: Fair values of net liabilities acquired 364
--------
Goodwill 366
========
The net liabilities acquired were as follows:
Cash at bank and in hand 6 12
Payable to EMED Mining Public Ltd (334) (167)
Payable to Kefi Minerals Plc (36) -
-------- --------
(364) 155
======== ========
Consideration - shares issued at premium 336
Cash and cash equivalents acquired (6)
--------
Cash outflow on acquisition 330
========
14. Related party transactions
The following transactions were carried out with related parties:
14.1 Compensation of key management personnel
The total remuneration of the Directors and other key management personnel was
as follows:
2006
------
GBP'000
Amounts paid to directors for expertise services 40
Share-based benefits to directors 62
Other key management personnel fees 33
Share-based benefits to other key management personnel 17
----
152
=====
Share-based benefits
The directors and key management personnel have been granted on 18 December 2006
ordinary share options that expire six years after grant date and are
exercisable at the exercise price in whole or in part no more than one third at
grant date, two thirds after one year from the grant date and the balance after
two years from the grant date. No options have been exercised during the period
from grant date to 31 December 2006.
15. Contingent liabilities
During the six months ended 30 June 2006, EMED Mining Public Ltd acquired a
proprietary geological database that covers extensive parts of Turkey and
Greece. The cost of obtaining the database was shared equally by the Company and
Eastern Mediterranean Resources A.E. (Greece) a wholly owned subsidiary of EMED.
Under the terms of the original agreement, an additional contingent
consideration of approximately €320.000 (£216.000) was to be settled by the
issuance of 1.728.984 ordinary shares in EMED at 12.5p each if EMED secured at
least four tenements in Turkey or Greece identified from the database.
Under the revised agreement of 22 November 2006, EMED transferred to Dogu
Akdeniz Minerally Ltd that part of the geological database that relates to areas
in Turkey. Consequently, EMED has been discharged from the original contingent
consideration in respect of Turkey.
Under the agreement, Dogu Akdeniz Mineralleri Ltd has undertaken to make a
payment of approximately €63.000 (AUD105.000) for each tenement it is
subsequently awarded in Turkey and which was identified from the database. The
maximum number of such payments required under the agreement is four, resulting
in a contingent liability of up to €252.000. These payments are to be settled by
issuing shares in KEFI Minerals plc.
16. Capital commitments
The Group has no capital or other commitments as at 31 December 2006.
17. Relationship deed
A Relationship Deed between EMED and the Company dated 7 November 2006, by which
EMED agrees not to operate in Bulgaria and Turkey, and the Company agrees not to
operate in Albania, Armenia, Azerbaijan, Cyprus, Greece, Hungary, Iran, Oman,
Romania, Saudi Arabia, Serbia or Slovakia the 'EMED Area'. The Relationship Deed
provides that EMED has the right to appoint one non-executive director of the
Company. It also provides EMED with a right of first refusal in respect of
funding any proposed mining or exploration project of the Company. The
Relationship Deed provides that the Company shall refer any opportunity to
conduct mining or exploration activity in the EMED Area to EMED, and EMED shall
refer any such opportunity in Bulgaria or Turkey to the Company.
18. Post balance sheet events
No events have arisen since the end of the financial period that have
significantly affected the operations of the Group, other than the settlement of
trade debtors and trade creditors principally associated with the admission to
AIM on 18 December 2006.
REVIEW REPORT TO THE MEMBERS
KEFI MINERALS PLC
We have reviewed the accompanying balance sheet of KEFI Minerals plc at 31
December 2006 and the related statements of income and cash flows for the period
then ended. These financial statements are the responsibility of the company's
management. Our responsibility is to issue a report on these financial
statements based on our review.
We conducted our review in accordance with the International Standard on
Auditing applicable to review engagements. This standard requires that we plan
and perform the review to obtain moderate assurance as to whether the financial
statements are free of material misstatements. A review is limited primarily to
inquiries of company personnel and analytical procedures applied to financial
data and thus provides less assurance than an audit. We have not performed an
audit and, accordingly, we do not express an audit opinion.
Nicosia, 21 March 2007 MOORE STEPHENS STYLIANOU & CO
CERTIFIED PUBLIC ACCOUNTANTS-CY
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