Last checked at 11 May 2009 07:00
AIM: EMED 11 May 2009
Final Results
EMED Mining Public Limited (the "Company"), the AIM quoted mining exploration and development company, today announces Final audited results for the year ended 31 December 2008.
Highlights -
EMED Mining continues to progress towards becoming a significant copper producer at the Rio Tinto Mine - an opportunity to produce copper at relatively low total cost (taking into account acquisition, start-up cost, production, guarantees and bonds and rehabilitation costs).
Rio Tinto Mine's JORC Code-compliant Ore Reserve estimated to total 123 million tonnes at 0.48% copper, containing 0.6 million tonnes copper. Start-up plans have verified by AMC Consultants (UK) Ltd and have been submitted to the regulatory authorities.
The initial JORC Code-compliant Mineral Resource for the Biely Vrch porphyry gold deposit in Slovakia is estimated to total 41.7 million tonnes at 0.79g/t gold, containing 1.1 million ounces of gold.
US$8.5 million (€6.4 million or £5.8 million) Convertible Loan Facility put in place in early 2009 and has £10 million Standby SEDA Facility for 2010.
Goldman Sachs International appointed lead-arranger for structuring and arranging the project finance, copper price hedging and related guarantee and finance facilities for the investment in the Rio Tinto Mine.
Corporate overheads and planned expenditure have been significantly reduced from 2008 levels to a level that still enables considerable progress to be made on the Rio Tinto Mine and on gold exploration in Slovakia during 2009.
Chairman Ronnie Beevor commented: "EMED Mining will continue to progress its two core projects in 2009. We are well placed in our two key commodities, gold and copper. The gold price has recently hit record highs largely as a result of the economic crisis and the expectation of renewed inflation.
"Copper has risen significantly off its recent lows, reflecting its importance in the infrastructure building now being pursued by China and other nations around the world. Copper's recovery bodes well for the early restart of Rio Tinto."
The Notice of Meeting and form of proxy along with the Annual Report and Accounts 2008 have been posted to shareholders and are available to download on the Investor Relations section of the Company's website at www.emed-mining.com.
As previously announced on 2nd April the Annual General Meeting of Shareholders of EMED Mining Public Limited will be held at the registered office of the Company - 1 Lambousa Street, 1095 Nicosia, Cyprus on Monday 1 June 2009 at 10.00.
The AGM will be followed by a presentation to shareholders by the Company's Chairman, Managing Director and Finance Director in London on the 2nd of June at 6pm. The presentation will take place at the offices of Bishopsgate Communications, 5-11 Worship Street, London EC2A 2BH.
Please email emed@bishopsgatecommunications.com if you would like to attend the presentation.
Enquiries
| EMED Mining | Fox-Davies Capital | RFC Corporate Finance | Bishopsgate Communications |
| Harry Anagnostaras-Adams | Jason Bahnsen | Stuart Laing | Nick Rome |
| +357 9945 7843 | +44 (0)207 936 5230 | +618 9480 2500 | +44 (0)207 562 3350 |
chairman's statement
Dear Fellow Shareholder
The global financial crisis has caused severe challenges for EMED Mining, following the substantial fall in the copper price, the collapse in junior equity markets and the consequent effect on our funding capability.
However, at EMED Mining we remain committed to our business strategy to build a European mining company focused on copper and gold. Despite the global financial crisis, EMED Mining has passed significant milestones at each of its two major projects: the Rio Tinto Mine in Spain; and at Biely Vrch in the Detva Gold Project in Slovakia.
On 30 September 2008, EMED Mining completed the acquisition from the MRI Group of the remaining 49% of the Rio Tinto Mine for 39 million shares and €53 million cash on deferred settlement. Achieving 100% ownership of the Rio Tinto Mine clarifies the legal structure and is now facilitating the permitting process with the Junta (Government) of Andalucia. We believe we are now making constructive progress on permitting. Then we would expect that production from the large open pit could be restarted within six months of final permitting. With the existing infrastructure the project has the capability to build up to initial steady-state production of 37,000 tonnes per annum of contained copper. There is expansion potential beyond that.
At Biely Vrch within the Detva gold project a substantial drilling program has culminated in an initial JORC Code compliant mineral resource of 41.7 million tones at 0.8% gold, containing 1.1 million ounces of gold. The deposit is within a cluster of volcanic centres, and we will be testing more gold porphyry prospects during 2009. EMED Mining has established strong relationships with the Slovak government, the local communities, business chambers, scientific societies and other stakeholders in this historic mining area.
EMED Mining's Directors believe that focusing on these two projects cost-effectively is the appropriate strategy in the current global economic environment. The Board has approved a substantially reduced expenditure budget for 2009, but one that will allow still for considerable progress on the Rio Tinto Mine and Detva Gold Project. Also, we are now minimizing expenditure on our copper-zinc prospects in Cyprus, and we have suspended further exploration activity in Georgia.
The global financial conditions have contributed to the volatility in EMED Mining's share price over 2008. In May 2008 our share price reached 30.5p, and we were able to place 50 million shares at 20p to raise GBP10M that month. But by year-end our share price had slumped to 5.75p and it was impossible to raise equity funds from conventional sources. Instead we entered into a convertible secured loan facility of up to US$8.5 million with two of EMED Mining's larger shareholders, Resource Capital Funds of the USA and RMB Australia at the conversion price of 4.13p and with a number of conditions. This was approved by shareholders in March 2009.
Following these significant fund raisings and the acquisition of the remaining 49% of Rio Tinto, over 60% of EMED Mining's fully diluted share capital is held by Resource Capital Funds, MRI Group of Switzerland, OZ Minerals of Australia, RMB Australia and by Directors and management, providing the Company with a strong and supportive shareholder base.
I welcome Ashwath Mehra and Ross Bhappu, who joined the Board during 2008. Mr Mehra is CEO of the MRI Group, and Dr Bhappu is a Partner of Resource Capital Funds. Michael Price retired from the Board in December owing to other commitments, and I would like to thank him for his contribution as a non-executive director.
I would particularly like to thank Harry Anagnostaras-Adams for his continuing dedication and hard work during 2008. Strong leadership, commercial and technical acumen have been vital in leading EMED Mining through the mining industry downturn and the financial markets squeeze.
We are fortunate to have such a strong and experienced management team led by Harry. I would like to thank everyone for their strong contributions in 2008 and ongoing commitment. Shareholders should be aware that most managers, as well as the directors, have accepted a 25% reduction in cash remuneration from March 2009.
Despite the global recession, EMED Mining will continue to progress its two core projects in 2009. We are well placed in our two key commodities, gold and copper. The gold price has recently hit record highs largely as a result of the economic crisis and the expectation of renewed inflation, and, at the current price of around US$900 per oz, Detva Gold is likely to be a commercially attractive project. Copper has risen significantly off its recent lows, reflecting its importance in the infrastructure building now being pursued by China and other nations around the world. Copper's recovery bodes well for the early restart of Rio Tinto.
I look forward to seeing you at our Annual General Meeting on 1 June 2009 in Nicosia, or at the Shareholder Briefing on 2 June 2009 in London.
Ronnie Beevor
Chairman
4 May 2009
Managing Director's Report
Encouraging progress continues to be made across our two main projects. The global financial crisis has presented extra challenges to us and has slowed our rate of progress. But it has also made our mission all the more important for the stakeholders we serve.
In Spain, we increased our ownership of the Rio Tinto Mine to 100% during 2008. We are confident that the remaining hurdles can be surmounted in 2009 and allow us to bring the mine back into production in 2010.
In Slovakia, work on our 100%-owned projects has progressed as planned and an initial Mineral Resource totaling 1.1 million ounces was estimated for the Biely Vrch gold deposit. Prospects analogous to Biely Vrch have been identified and are to be drilled during 2009.
Strategy
EMED Mining has a strong commitment to responsible development of metal production operations in Europe, with an initial focus on copper and gold. EMED Mining was originally formed by Australian mining industry specialists and is based in Cyprus, the site of its first project, a location geographically central to the Company's area of interest and country which is a member of both the European Union and the British Commonwealth.
EMED Mining's team now includes specialists from the Americas, Cyprus, Slovakia and Spain with most of our 40 personnel now being Spanish Citizens and based at Rio Tinto. Upon triggering production at Rio Tinto, we would complete the assembly of the production management team and initiate the recruitment drive for over 300 personnel to be based at Rio Tinto which would become our operational and technical headquarters.
Our regional strategy has not changed since EMED Mining listed on AIM in May 2005 and the key components of this strategy are to:
focus on demonstrably well-endowed areas and apply modern exploration techniques;
use relationships in the region to provide a high level of technical, political and other expertise;
demonstrate a commitment to the region by having the corporate office in Nicosia, the operational headquarters in Rio Tinto and establishing bases near the geographic centre of each project ; and
integrate the practical experience gained in the world's leading metal-producing countries with local expertise in each country where EMED Mining is active.
This strategy has been successfully implemented to date with the Company now enjoying first-mover advantage in the region. We have established a position of prominence within the industry in Spain, Slovakia and Cyprus.
Our core projects in Spain and Slovakia have such strong potential to add major value to the Company that new projects have not been added to the portfolio during 2008. However, we continue to monitor the Eurasian region for complementary opportunities with a view to selectively expanding the portfolio, if warranted. As new opportunities are identified, we assess the commercial and sovereign risks before investing further time and money.
Following an internal assessment of project risk, the Company suspended its activities in Georgia prior to the military hostilities which occurred in August 2008. EMED Mining's local 100%-owned subsidiary and licence holdings are preserved. Our associates in Georgia maintain a watching brief on opportunities there and within neighbouring countries.
We have protected the Company in the current adverse financial climate by significantly reducing expenditure on all our projects and reducing corporate overheads by more than 60%. Most senior management volunteered to take a 25% pay reduction in exchange for more incentive options. We are also managing financial and other risks by working with several strong partners, and actively seeking further partners who may add value to our projects.
Spain - Opportunity to Restart Major Copper Mine
The established open-pit mine, copper-concentrator plant and other infrastructure at the Company's Rio Tinto Mine provide an excellent opportunity to bring a large copper mine into production at a relatively low total cost. EMED Mining has accomplished much since acquiring an option over the project in May 2007 and the move to full ownership in October 2008.
The Rio Tinto operation was placed on care and maintenance in 2003 due to prevailing low copper prices at that time. The industry's average total cost is approaching US$2.00/lb of copper as new more expensive projects are planned to meet projected long-term supply shortages globally.
Rio Tinto is our priority development project because it can potentially be brought into production relatively quickly. The go-ahead decision depends upon completing commercial settlements, receiving all necessary government consents and shareholder approvals, and having appropriate finance in place.
The restart of Rio Tinto Mine offers the opportunity to trigger EMED Mining's commencement of production to potentially generate significant cash flow and profits, as well as being beneficial for all stakeholders.
We are working to earn the trust of the Spanish people, the provincial Government of Andalucia and other stakeholders in Rio Tinto Mine. It has taken longer than first thought, but steady progress is being made in our due diligence, and we are convinced that our plans should fulfil all requirements and standards at the local, regional, national and international levels.
Submissions have been made to the Andalucian regulatory authorities. The approval process starts with the consideration of the legal process in respect of this unique asset and with acceptance of the competence of EMED Mining subsidiary, EMED Tartessus, to hold the mineral rights. The process then flows through to the approval of operating plans, rehabilitation plans and guarantees. Some 40 individual permits are involved. We are now addressing all aspects in a manner determined in consultation with the relevant authorities.
This timetable will be adjusted as required, depending upon the completion of the outstanding commercial and regulatory matters, as well as the financial environment generally.
During 2008, EMED Mining formed important partnerships relating to the concentrate marketing and financing of the Rio Tinto Mine. MRI Trading AG was appointed marketing and sales agent for copper concentrate produced by the Rio Tinto Mine. Goldman Sachs International was appointed as lead-arranger for arranging and structuring the project finance, copper price hedging and related guarantee and finance facilities
As a result of EMED Mining's initiative, leading international laboratory group ALS Laboratory Services has taken over the laboratory at the Rio Tinto Mine and is seeking international accreditation before expanding its activities there. More initiatives are likely to follow and support the establishment of long-term sustainable enterprises alongside the restarted Rio Tinto Mine - the largest in Spain.
We expect the mine to operate for over 20 years and to be expanded beyond initial planned levels of annual output. Therefore the current negotiation and permitting process will, in due course, prove to have been beneficial for all stakeholders. The region of Andalucia has the potential to once again become a metal producing region of international standing. It is notable that in recent years there have been more permits for major mining operations issued in the world-class Iberian Pyrite Belt than elsewhere in Europe.
Slovakia - Initial 1.1 Million Ounce Gold Resource
There are few new deposits discovered around the world each year of over one million ounces. Drilling at the Biely Vrch Prospect in Slovakia by EMED Mining during 2008 culminated in the confirmation of the Company's preliminary estimates with an initial JORC-Code compliant Mineral Resource estimate of 41.7 million tonnes at 0.79g/t gold, containing 1.1 million ounces of gold.
Since discovery of Biely Vrch by EMED Mining in late 2006, our exploration team has quickly delineated a very sizeable gold deposit, tested and rejected (as sub-economic grade) two other analogous prospects and is currently evaluating four other confirmed porphyry prospects.
EMED Mining's large (1,000 km2) 100%-owned tenement holding in the Central Slovakian Volcanic Field is very prospective for gold, copper and other metals. Gold porphyry deposits like that at Biely Vrch typically occur within a cluster of similar deposits. EMED Mining's exploration method is proven to be effective and low cost - now that we have confirmed the geological setting, the exploration model and the techniques that are most cost-effective there.
With our discovery cost to date of under $5 per ounce, with gold prices now in the order of US$900 per ounce and a strong outlook for further increases in the gold price, Biely Vrch and our surrounding 100%-owned licences in Slovakia are becoming very valuable properties.
We will, over the next six months, consider how best to optimize the development potential of these properties for shareholders.
Social Responsibility is Central
Our aim is to add value to our projects and create wealth for our stakeholders through the cost-effective discovery or acquisition and subsequent development of mineral resources. Developing our "social licence to operate" at every step of the way is crucial to turning our projects into profitable mining operations capable of making long-term contributions to the communities they serve.
Operating in a socially responsible manner is central to our business model. Effective communication with a range of stakeholders is essential to ensuring that we fulfill these responsibilities.
We seek to reach consensus with local communities through a consultative and frank process at an early stage. Our major projects in Spain and Slovakia have regular newsletters aimed at keeping stakeholders informed of our activities. These newsletters are available on our websites in English, Spanish and Slovak (see www.emed-tartessus.com and www.emed-slovakia.com). We work diligently in accordance with our corporate ethos founded on integrity, transparency and progress.
Many of the opportunities we examine involve a "clean-up function" before the project can progress. This was the case when we entered Georgia where it was clear that the regulatory approval of our licence holding depended upon our removal of the original local interests from the ownership structure - and indeed this was done quite quickly. In Spain we have been dealing with an analogous clean-up challenge but it has been far more complex and time-consuming than anticipated. Few steps now remain to be taken and all legitimate stakeholders are collaborating to facilitate the start-up. The benefits we potentially bring to the local region include direct employment of over 300 people and expenditure locally of over €1 billion over the initial 14 years. We have also started to facilitate the creation of a number of sustainable enterprises that will leverage off the existence of the mine and have every opportunity to continue viably well beyond the cessation of mining say 20 years after start-up.
A small but notable initiative during 2008 was hosting a Clean Up the World community event in Detva, Slovakia, with the local municipalities and with the Faculty of Environment of the Technical University of Zvolen convening. This followed our international conference on "Responsible Mining and Environmental Protection" in Detva, Slovakia 2007 and a similar conference held in Cyprus during 2006. These conferences bring various stakeholders together to foster a greater understanding of the nature and ramifications of mineral resources exploration and development.
EMED Mining focuses on sustainable development practices through compliance with European Union and other leading-edge international standards.
Our aim is to realise the extensive benefits of metal production for a range of stakeholders. EMED Mining is committed to achieving development that provides enormous benefit today, without compromising the ability of future generations to meet their own needs both economically and environmentally.
Outlook for Copper and Gold Prices
The current global financial crisis has taken its toll on economies and markets. The copper price declined sharply in the second half of 2008, as have the prices of many other commodities.
Many industry commentators agree that:
the global recessionary outlook will constrain near-term copper demand growth;
copper demand will however continue to increase due to growing demand because of to the industrialisation of certain large countries, particularly China;
copper supply growth is very constrained as bottlenecks restrict development of new copper mines and supply disruptions among established producers continue to mount; and
average total costs in the industry are rising towards $2.00/lb ($4,400/tonne).
The fundamentals of the copper outlook continue to point towards a copper price at a premium to $2.00/lb ($4,400/tonne).
In contrast to copper and most other commodities, gold has maintained its value over the past year. Factors pointing towards gold price increasing are:
the safe-haven nature of gold as an investment has been reinforced by current global economic volatility and distress;
inflationary government policies are likely to debase paper currencies;
average total costs in the industry are now rising towards $650/ounce; and
very few large (>1 million ounce) gold deposits are discovered each year.
Outlook for EMED Mining
EMED Mining is weathering the storm of the global financial crisis which has nevertheless taken its toll. Our cost of capital increased significantly and we have had to retrench many good personnel. Nevertheless the Company is well placed to continue building on the platform it has established.
In Spain, we now have 100% ownership of the Rio Tinto Mine and are confident that copper production can be restarted approximately six months after the required permits are received.
In Slovakia, we intend to progress our Biely Vrch discovery towards development and to conduct low-cost testing of new prospects which appear analogous to Biely Vrch.
The outlooks for copper and gold prices are certainly among the strongest for all metals.
Our operating and budget tightening measures are intended to preserve, but advance our two core assets. We have the people and projects to achieve shareholder value significantly higher than that implied by EMED Mining's current stockmarket capitalisation.
EMED Mining's rapid progress has been made possible by the focus, commitment and loyalty of our multi-cultural team of internationally experienced mining industry professionals. I thank our team for their efforts during 2008. And I particularly thank the families that support the efforts of our personnel. And, as a management team, we thank our Board and shareholders for supporting our efforts to build our organization during such particularly challenging times.
We are determined to realise our Company's ambition of becoming a major European-based mining company that will employ many more people and provide long term benefit to all our stakeholders.
Harry Anagnostaras-Adams
Managing Director
4 May 2009
COMPETENT PERSONS FOR REPORTING OF RESOURCES AND RESERVES
Information in this report as regards the Rio Tinto Mine that relates to Mineral Resource estimates is based on information compiled by Mr. Pat Stephenson, BSc (Geology) and Mr. Ron Cunneen, BSc (Geology), Mr. Stephenson taking responsibility for the Mineral Resource estimates and Mr. Cunneen taking responsibility for the data on which the estimates are based. Mr Stephenson is Regional Manager, Vancouver and Principal Geologist with AMC Mining Consultants (Canada) Ltd and a full-time employee of that company. He is a Fellow of The Australasian Institute of Mining and Metallurgy. Mr. Cunneen is Head of Exploration for EMED Mining and a full-time employee of that company. He is a Member of The Australian Institute of Geoscientists. Mr. Stephenson and Mr Cunneen have sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activities which they are undertaking to qualify as Competent Persons as defined in the JORC Code.
Information in this report as regards the Rio Tinto Mine that relates to Ore Reserve estimates is based on information compiled by Mr. Andy Robb, BSc (Mining Engineering). Mr. Robb is Principal Mining Consultant with AMC Consultants and a full-time employee of that company. He is a Member of the Australasian Institute of Mining and Metallurgy and has sufficient experience 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 JORC Code.
References in this report as regards the Mineral Resources or exploration results and potential in Slovakia, Cyprus or elsewhere have been approved for release by Mr. Ron Cunneen.
financial review
EMED Mining has secured funding for its planned activities during 2009, has a standby facility for 2010 and continues to build its financial capacity in tandem with its growth plans.
The turmoil in world financial markets serves to highlight the importance of the Company's strong shareholder base which is dominated by mining industry specialists.
2008 Financial Results
In 2008 EMED Mining reported exploration expenditure of €6.7 million (2007 €3.6 million) after minority interests. The total reported loss for the period was €16.6 million (2007 €11.7 million) after provision for diminution in value of goodwill of €9.3 million (2007 Nil). The Company has taken a conservative approach in its accounting policy towards goodwill on acquisition and exploration expenditure, as all such expenditures are written off on acquisition or when incurred pending a commitment to develop production operations. This policy is a major factor in the Company recording the net loss for the period.
At year-end, EMED Mining had cash and listed investments totaling €2.0 million (2007 €4.6 million).
Capital Structure
Two major share placements were completed during 2008:
The issue of 50.0 million new ordinary shares to various institutional investors at 20p in May 2008, raising £10 million ; and
The issue of 39.1 million new ordinary shares MRI Group at 21p in October 2008 as part of the consideration for acquiring the remaining 49% of EMED Tartessuss SL.
EMED Mining had 241 million shares on issue (332 fully-diluted) at 31 December 2008.
The convertible loan repayable to YA Global Investments had a principal amount outstanding of US$3.9 million at 31 December 2008. This loan may be converted by YA Global into shares at a fixed price of 4.1p per share or repaid by the Company by monthly instalments in cash or shares issued at prevailing market prices in the period to January 2010. Upon its repayment, the Company may draw on its £10 million standby facility with YA (standby equity distribution agreement, or "SEDA").
In March 2009, shareholders approved a US$8.5 million Convertible Loan facility provided by Resource Capital Funds and RMB Australia. The principal amount has a fixed conversion price of 4.1p, equating to the potential issuance of 144.2 million shares if the facility is fully drawn.
EMED Mining has a strong and supportive shareholder base with over 60% of the fully-diluted share capital held by mining industry specialists comprising the Board and management, mining financiers Resource Capital Funds of USA and Rand Merchant Bank of South Africa, mining company OZ Minerals of Australia and commodities trader MRI Group of Switzerland.
2009 Budget
Cash expenditure levels have been reduced from the 2008 level of €13.2 million to a budgeted €6.2 million for 2009, summarized as follows:
Rio Tinto Mine = €4.0 million (2008 €8.3 million).
Slovakia gold exploration = €1.1 million (2008 €3.0 million)
Other projects = €0.1 million (2008 €0.4 million)
Corporate = €1.0 million (2008 €1.5 million)
Personnel numbers have been reduced by over 60%. The salaries of most senior management have been significantly reduced and they have been appropriately compensated with enhanced incentive arrangements.
EMED MINING PUBLIC LIMITED
CONSOLIDATED STATEMENT OF OPERATIONS
Year ended 31 December 2008
| 2008 | 2007 | |||
| Notes | EUR 000 | EUR 000 | ||
| Revenue | ||||
| Exploration costs | (6,732) | (3,583) | ||
| Evaluation costs of Rio Tinto Mine | 11 | 5,285 | (5,285) | |
| Gross loss | (1,447) | (8,868) | ||
| Administration expenses | (1,550) | (2,177) | ||
| Provision for impairment of goodwill | (9,333) | (104) | ||
| Share of results of associates | (2,004) | (749) | ||
| Operating loss | 4 | (14,334) | (11,898) | |
| Net Foreign Exchange transaction gain/(loss) | (2,481) | 88 | ||
| Finance income | 6 | 93 | 3 | |
| Finance costs | 7 | (336) | (28) | |
| Loss before tax | (17,058) | (11,835) | ||
| Tax | 8 | 453 | - | |
| Net loss for the year | (16,605) | (11,835) | ||
| Attributable to: Equity holders of the parent | (16,622) | (11,718) | ||
| Minority interest | 17 | (117) | ||
| Net loss for the period | (16,605) | (11,835) | ||
| Loss per share (pence) | 9 | (8) | (10) |
EMED MINING PUBLIC LIMITED
BALANCE SHEET
31 December 2008
| The Group 2008 | The Company 2008 | The Group 2007 | The Company 2007 | |||||
| Notes | EUR 000 | EUR 000 | EUR 000 | EUR 000 | ||||
| ASSETS | ||||||||
| Nonߛcurrent assets | ||||||||
| Property, plant and equipment | 10 | 7,505 | 189 | 277 | 267 | |||
| Intangible assets | 11 | 2,009 | - | - | - | |||
| Deferred Tax | 8 | 1,811 | - | - | - | |||
| Investments in subsidiaries | 12 | - | 4,245 | - | 889 | |||
| Investments in associates | 13 | 499 | 630 | 697 | 584 | |||
| 11,824 | 5,064 | 974 | 1,740 | |||||
| Current assets | ||||||||
| Inventories | 14 | - | - | 106 | 106 | |||
| Trade and other receivables | 15 | 2,325 | 24,866 | 1,238 | 10,612 | |||
| Cash at bank and in hand | 16 | 1,420 | 967 | 4,438 | 1,565 | |||
| 3,745 | 25,833 | 5,782 | 12,283 | |||||
| Total assets | 15,569 | 30,897 | 6,756 | 14,023 | ||||
| EQUITY AND LIABILITIES | ||||||||
| Capital and reserves | ||||||||
| Share capital | 17 | 795 | 795 | 507 | 507 | |||
| Share premium | 17 | 40,680 | 40,680 | 18,054 | 18,054 | |||
| Share options reserves | 18 | 1,843 | 1,843 | 1,110 | 1,110 | |||
| Accumulated losses | (32,110) | (16,249) | (17,026) | (9,867) | ||||
| Total equity attributable to equity holders of the parent | 11,208 | 27,069 | 2,645 | 9,804 | ||||
| Minority interest | (92) | - | (108) | - | ||||
| Total equity | 11,116 | 27,069 | 2,537 | 9,804 | ||||
| Non-current liabilities | ||||||||
| Borrowings | 20 | 308 | 308 | 3,007 | 3,007 | |||
| Current liabilities | ||||||||
| Trade and other payables | 19 | 1,735 | 1,110 | 802 | 802 | |||
| Borrowings | 20 | 2,410 | 2,410 | 410 | 410 | |||
| 4,145 | 3,520 | 1,212 | 1,212 | |||||
| Total liabilities | 4,453 | 3,828 | 4,219 | 4,219 | ||||
| Total equity and liabilities | 15,569 | 30,897 | 6,756 | 14,023 |
On 4 May 2009, the Board of Directors of EMED MINING PUBLIC LIMITED authorized these financial statements for issue.
| A. Anagnostaras-Adams | |
| Director | |
EMED MINING PUBLIC LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2008
| Share capital | Share premium | Share options reserve | Accumulated losses | Equity reserve | ExchangeDifference reserve | Total | |
| EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 | |
| At 1 January 2007 | 315 | 8,497 | 399 | (6,472) | 535 | (34) | 3,240 |
| Net loss for the year | - | - | - | (11,718) | - | - | (11,718) |
| Minority interest | - | - | - | 38 | - | - | 38 |
| Issue of share capital | 192 | 10,662 | - | - | - | - | 10,854 |
| Share issue costs | - | (1,105) | - | - | - | - | (1,105) |
| Recognition of share based payments | - | - | 766 | - | - | - | 766 |
| Share of equity adjustments in associates | - | - | - | - | 316 | - | 316 |
| Exchange difference due to change of presentation currency | - | - | (55) | 354 | - | - | 299 |
| Exchange difference on translation of subsidiaries | - | - | - | - | - | (45) | (45) |
| At 31 December 2007/ 1 January 2008 | 507 | 18,054 | 1,110 | (17,798) | 851 | (79) | 2,645 |
| Net loss for the year | - | - | - | (16,622) | - | - | (16,622) |
| Minority interest | - | - | - | 17 | - | - | 17 |
| Issue of share capital | 288 | 23,156 | - | - | - | - | 23,444 |
| Share issue costs | - | (530) | - | - | - | - | (530) |
| Recognition of share based payments | - | - | 733 | - | - | - | 733 |
| Share of equity adjustments in associates | - | - | - | - | 1,555 | - | 1,555 |
| Transfer of equity reserve to retained earnings | - | - | - | 2406 | (2,406) | - | |
| Exchange difference on translation of subsidiaries | - | - | - | - | - | (34) | (34) |
| At 31 December 2008 | 795 | 40,680 | 1,843 | (31,997) | - | (113) | 11,208 |
EMED MINING PUBLIC LIMITED
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 December 2008
| 2008 | 2007 | ||||||||
| Notes | EUR 000 | EUR 000 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
| Loss before tax | (17,058) | (11,835) | |||||||
| Adjustments for: | |||||||||
| Depreciation of property, plant and equipment | 10 | 85 | 54 | ||||||
| Provision for impairment of goodwill | 11 | 9,333 | 104 | ||||||
| Shareߛbased benefits | 18 | 733 | 766 | ||||||
| Reverse of provision for evaluation costs of Rio Tinto Mine | 11 | (5,285) | - | ||||||
| Purchase of services with settlement in shares | - | 22 | |||||||
| Share of loss from associates | 2,004 | 749 | |||||||
| Interest income Exchange difference due to change of presentation currency | 6 | (93) - | (3) 439 | ||||||
| Exchange difference on translation of subsidiaries | (34) | (70) | |||||||
| Operating loss before working capital changes | (10,315) | (9,774) | |||||||
| Changes in working capital: | |||||||||
| Inventories | 106 | (106) | |||||||
| Trade and other receivables | 589 | (510) | |||||||
| Trade and other payables | (3,607) | 362 | |||||||
| Cash flows used in operations | (13,227) | (10,028) | |||||||
| Tax paid | - | - | |||||||
| Net cash used in operating activities | (13,227) | (10,028) | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
| Purchase of property, plant and equipment | 10 | (2,112) | (256) | ||||||
| Purchase of intangible assets | 11 | (162) | - | ||||||
| Acquisition of subsidiaries | 11 | 689 | - | ||||||
| Acquisition of associate | 13 | (251) | - | ||||||
| Interest received | 93 | 3 | |||||||
| Net cash used in investing activities | (1,743) | (253) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
| Proceeds from issue of share capital | 13,112 | 10,854 | |||||||
| Listing and issue costs | (530) | (1,190) | |||||||
| Repayment of borrowings | (630) | ||||||||
| Proceeds from borrowings | - | 3,417 | |||||||
| Net cash from financing activities | 11,952 | 13,081 | |||||||
| Net increase in cash and cash equivalents | (3,018) | 2,800 | |||||||
| Cash and cash equivalents: | |||||||||
| At beginning of the period | 16 | 4,438 | 1,638 | ||||||
| At end of the period | 16 | 1,420 | 4,438 | ||||||
EMED MINING PUBLIC LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Year ended 31 December 2008
1. Incorporation and principal activities
Country of incorporation
EMED Mining Public Limited (the "Company") was incorporated in Cyprus on 17 September 2004 as a private company with limited liability under the Companies Law, Cap. 113 and was converted to a public limited liability company at 26 January 2005. Its registered office is at , 1 Lambousa Street, Nicosia, Cyprus. The Company was listed on the Alternative Investment Market ("AIM") of the London Stock Exchange in May 2005.
Principal activities
The principal activity of the Company and its subsidiaries ("the Group") is to explore for and develop natural resources, with a focus on base and precious metals in the regions of Western and Central Europe, the Middle East and Western Asia.
2. Accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied 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 (IFRSs) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap.113. The consolidated financial statements have been prepared under the historical cost convention.
Going concern
The Directors have formed a judgment at the time of approving the financial statements that there is a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future.
The financial information has been prepared on the going concern basis, the validity of which depends principally on the discovery of economically viable mineral deposits, obtain the necessary mining licences and the availability of subsequent funding to extract the resource or alternatively the availability of funding to extend the Company's exploration activities. The financial information does not include any adjustment that would arise from a failure to complete either option.
Adoption of new and revised International Financial Reporting Standards (IFRSs)
During 2008 the Group adopted all the new and revised IFRSs and International Accounting Standards (IAS), which are relevant to its operations and are effective for accounting periods commencing on 1 January 2008.
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.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities (including special purpose entities) controlled by the Company (its subsidiaries). Control is achieved where the Company has the 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 inter-company transactions and balances between Group companies have been eliminated during consolidation.
Acquisitions
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 IFRS 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 IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.
Goodwill
Purchased goodwill is capitalized and classified as an asset on the balance sheet. 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.
Goodwill is reviewed for impairment on an annual basis. When the directors consider the initial value of the acquisition to be negligible, the goodwill is written off to the Income Statement immediately. Trading results of acquired subsidiary undertakings are included from the date of acquisition.
Goodwill is deemed to be impaired when the present value of the future cash flows expected to be derived is lower than the carrying value. Any impairment is charged to the Income Statement immediately.
Investments in subsidiary companies
Investments in subsidiary companies are stated at cost less provision for impairment in value, which is recognised as an expense in the period in which the impairment is identified.
Investments in associate companies
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are initially recognized at cost and are accounted for by the equity method of accounting.
Revenue recognition
Revenues earned by the Group are recognised on the following bases:
Interest income
Interest income is recognised on a time-proportion basis using the effective interest method.
Finance costs
Interest expense and other borrowing costs are charged to the income statement as incurred.
Foreign currency translation
| (i) | Functional and presentation currency |
| Items included in the Group's financial statements are measured using the currency of the primary economic environment in which the entity operates (''the functional currency''). During the year, the functional currency of the group has changed from GBP to Euro. This has been accounted for on a prospective basis in accordance with IAS21. The change in the functional currency has been brought about by the increased significance to the group of the Spanish operations which, together with the operations in Slovakia, makes the functional currency of the group Euro. The financial statements are presented in Euros, which is the Group's functional and presentation currency. | |
| (ii) | Foreign currency translation |
| Foreign currency transactions are translated into the measurement currency using the exchange rates prevailing at the date of the transactions. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. | |
| (iii) | Foreign operations |
| On consolidation, the assets and liabilities of the consolidated entity's overseas operations are translated at exchange rates prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the period unless exchange rates fluctuate significantly. Exchange differences arising, if any, are recognised in the foreign currency translation reserve, and recognised in profit or loss on disposal of the foreign operation. |
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 substantively 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. Currently enacted tax rates are used in the determination of deferred tax.
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.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal authority.
Acquisitions of assets
All assets acquired, including property, plant and equipment other than goodwill and intangibles, are initially recorded at their cost of acquisition at the date of acquisition, being the fair value of the consideration provided plus incidental costs directly attributable to the acquisition.
When equity instruments are issued as consideration, their market price at the date of acquisition is used as fair value, except where the notional price at which they could be placed in the market is a better indication of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity subject to the extent of proceeds received, otherwise expensed.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation.
Depreciation is calculated on the straightߛline method to write off the cost of each asset to their residual values over their estimated useful life. The annual depreciation rates used are as follows:
| Motor vehicles | 20% |
| Furniture, fixtures and office equipment | 10%-20% |
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.
Expenditure for repairs and maintenance of property, plant and equipment is charged to the income statement of the year in which they were incurred. The cost of major renovations and other subsequent expenditure are included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset.
Gains and losses on disposal of property, plant and equipment are determined by comparing proceeds with carrying amount and are included in profit from operations.
Share capital
Ordinary shares are classified as equity.
Exploration costs
The Group has 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 capitalization of exploration costs.
Shareߛbased compensation benefits
IFRS 2 "Shareߛbased Payment" requires the recognition of equityߛsettled shareߛbased payments at fair value at the date of grant and the recognition of liabilities for cashߛsettled shareߛbased payments at the current fair value at each balance sheet date.
The fair value is measured using the Black Scholes pricing model. The inputs used in the model are based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
For 2008, the impact of share-based payments was a net charge to income of EUR732,687 (2007: EUR767,124). At 31 December 2008, the equity reserve recognized for share based payments amounted to EUR1,843,243 (2007: EUR1,110,556).
Use and revision of accounting estimates
The preparation of the financial report requires the making of estimations and assumptions that affect the recognised amounts of assets, liabilities, revenues and expenses and the disclosure of contingent liabilities. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise cash at bank and in hand.
Borrowings
Borrowings are recorded initially at the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any differences between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Financial risk factors
The Group is exposed to interest rate risk, liquidity risk, currency risk and capital risk management arising from the financial instruments it holds. The risk management policies employed by the Group to manage these risks are discussed below:
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group's income and operating cash flows are substantially independent of changes in market interest rates as the Group has no significant interest-bearing assets. The Group is exposed to interest rate risk in relation to its non-current borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group's management monitors the interest rate fluctuations on a continuous basis and acts accordingly.
At the reporting date the interest rate profile of interest- bearing financial instruments was:
Fixed rate instruments
| 2008 | 2007 | ||
| EUR 000 | EUR 000 | ||
| Financial liabilities | 2,718 | 3,417 |
3. Financial risk management
Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially enhances profitability, but can also increase the risk of losses. The Group has procedures with the object of minimising such losses such as maintaining sufficient cash and other highly liquid current assets and by having available an adequate amount of committed credit facilities.
The following tables detail the Group's remaining contractual maturity for its financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows.
| 31 December 2008 | Carrying amounts | Contractual cash flows | 3 months or less | 3 - 12 months | 1 - 2 years | 2 - 5 years | More than 5 years |
| EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 | |
| Other loans | 2,718 | 2,843 | 481 | 2,051 | 311 | - | - |
| Trade and other Payables | 1,735 | 1,735 | 1,735 | - | - | - | - |
| 4,453 | 4,578 | 2,216 | 2,051 | 311 | - | - |
| 31 December 2007 | Carrying amounts | Contractual cash flows | 3 months or less | 3 - 12 months | 1 - 2 years | 2 - 5 years | More than 5 years |
| EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 | |
| Other loans | 3,417 | 3,668 | - | 410 | 2,460 | 547 | - |
| Trade and other Payables | 802 | 802 | 802 | - | - | - | - |
| 4,219 | 4,470 | 802 | 410 | 2,460 | 547 | - |
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 Group's measurement currency. The Group is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the US Dollar and the British Pound. The Group's management monitors the exchange rate fluctuations on a continuous basis and acts accordingly.
The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:
| Liabilities | Assets | ||||||
| 2008 | 2007 | 2008 | 2007 | ||||
| EUR 000 | EUR 000 | EUR 000 | EUR 000 | ||||
| United States Dollar | 2,718 | 3,417 | 86 | 771 | |||
| Great Britain Pound | - | - | 754 | 607 | |||
| Australian Dollar | - | - | 5 | 33 | |||
Sensitivity analysis
A 10% strengthening of the Euro against the following currencies at 31 December 2008 would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. For a 10% weakening of the Euro against the relevant currency, there would be an equal and opposite impact on the profit and other equity.
| Equity | Profit or Loss | ||||||
| 2008 | 2007 | 2008 | 2007 | ||||
| EUR 000 | EUR 000 | EUR000 | EUR 000 | ||||
| United States Dollar | 263 | 265 | 263 | 265 | |||
| Great Britain Pound | (75) | (61) | (75) | (61) | |||
| Australian Dollar | (1) | (3) | (1) | (3) | |||
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance. The Group's overall strategy remains unchanged from last year.
Fair value estimation
The fair values of the Group's financial assets and liabilities approximate their carrying amounts at the balance sheet date.
4. Operating loss
| 2008 | 2007 | ||
| EUR 000 | EUR 000 | ||
| Operating loss is stated after charging the following items: | |||
| Provision for impairment of goodwill (Note 11) | 9,333 | 104 | |
| Evaluation costs of Rio Tinto Mine (Note 11) | (5,285) | 5,285 | |
| Depreciation of property, plant and equipment (Note 10) | 85 | 54 | |
| Share-based employee benefits | 733 | 766 | |
| Auditors' remuneration | 35 | 48 |
5. Business and geographical segments
Business segments
The Group has only one distinct business segment, being that of mineral exploration and development.
Geographical segments
The Group's exploration activities are located in Cyprus, Georgia, Greece, Spain and Slovakia and its administration and management is based in Cyprus.
| Cyprus | Spain | Slovakia | Georgia | Europe | Consol. | Total | |
| EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 | |
| 2008 | |||||||
| Operating loss | 821 | (1,356) | (2,263) | (176) | (23) | (2,997) | |
| Financial income | 93 | 93 | |||||
| Financial costs | (2,347) | (1) | (5) | - | (464) | (2,817) | |
| Loss for the year | (1,433) | (1,357) | (2,268) | (176) | (23) | (464) | (5,721) |
| Share of results from associates | (2,004) | ||||||
| Impairment of Goodwill | (9,333) | ||||||
| Loss before tax | (17,058) | ||||||
| Tax | 453 | ||||||
| Net Loss for the year | (16,605) | ||||||
| Total assets | 3,426 | 12,017 | 287 | 245 | 58 | (464) | 15,569 |
| Total liabilities | (3,841) | (593) | (4) | (7) | (8) | (4,453) | |
| Depreciation of fixed assets | 58 | 1 | 9 | 17 | 85 | ||
| 2007 | |||||||
| Operating loss | (3,280) | (5,285) | (2,161) | (276) | (38) | (104) | (11,144) |
| Financial income | 3 | 77 | 127 | - | 13 | 220 | |
| Financial costs | (85) | (1) | (76) | (162) | |||
| Loss for the year | (3,362) | (5,208) | (2,035) | (352) | (25) | (104) | (11,086) |
| Share of results from associates | (749) | ||||||
| Net loss for the year | (11,835) | ||||||
| Total assets | 14,053 | 2,601 | 170 | 1,236 | 60 | (11,364) | 6,756 |
| Total liabilities | (6,422) | (2,524) | (3,011) | (2,633) | (176) | 10,547 | (4,219) |
| Depreciation of fixed assets | 51 | 3 | 54 | ||||
| 6. Finance income | 2008 | 2007 | |
| EUR 000 | EUR 000 | ||
| Interest income | 93 | 3 | |
| 93 | 3 |
| 7. Finance costs | |||
| Bank interest | 276 | 7 | |
| Sundry finance expenses | 60 | 21 | |
| 336 | 28 |
| 8. Tax | |||
| Current tax: | |||
| Deferred tax due to tax losses | 453 | - | |
| Total charge for the period | 453 | - |
The tax on the Group's results before tax differs from the theoretical amount that would arise using the applicable tax rates as follows:
| 2008 | 2007 | ||
| EUR 000 | EUR 000 | ||
| Loss before tax | (17,058) | (11,835) | |
| Tax calculated at the applicable tax rates | (1,403) | (1,437) | |
| Tax effect of expenses not deductible for tax purposes | 1,402 | 61 | |
| Tax effect of tax loss for the year | 566 | 1,310 | |
| Tax effect of allowances and income not subject to tax | (539) | 67 | |
| Tax effect of tax loss deferred over the next five years | 12 | 41 | |
| Tax effect of utilization of tax losses brought forward that are deferred over the next five years | (38) | (42) | |
| Deferred tax | 453 | - | |
| Tax charge | 453 | - |
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 2008, the balance of tax losses which is available for offset against future taxable profits amounts to EUR21,470,796 (2007: EUR16,918,907).
| Cyprus | Georgia | Greece | Slovakia | Total | |
| Tax year | EUR | EUR | EUR | EUR | EUR |
| Losses b/f | 1,378,305 | - | - | - | 1,378,305 |
| 2005 | 2,016,449 | - | - | 450,834 | 2,467,283 |
| 2006 | 2,148,826 | 215,915 | 12,740 | 632,331 | 3,009,812 |
| 2007 | 7,938,430 | 167,567 | 9,248 | 1,948,262 | 10,063,507 |
| 2008 | 2,964,045 | 163,784 | 21,001 | 1,403,059 | 4,551,889 |
| 16,446,055 | 547,266 | 42,989 | 4,434,486 | 21,470,796 |
| Deferred Tax Asset | 2008 | 2007 | |
| EUR 000 | EUR 000 | ||
| Deferred Tax on acquisition of EMED Tartessus S.L. | 1,358 | - | |
| Recognised in current period | 453 | - | |
| 1,811 | - |
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%.
Caucasus
The corporation tax rate is 20%. Due to no profit and no losses sustained in the period, no tax liability arises in the Company. Under current legislation, tax losses may be carried forward and be set off against taxable income in the following five years.
Georgia
The corporation tax rate is 15%. Due to tax losses sustained in the period, no tax liability arises in the Company. Under current legislation, tax losses may be carried forward and be set off against taxable income in the following five years. Per local tax legislation, geological and associated administrative expenses are deferred for tax purposes over a period of 5 years. Therefore, there is a deferred expense of EUR664,240 (USD936,208) available for offsetting in future periods.
Greece
The corporation tax rate is 29%. Due to tax losses sustained in the period, no tax liability arises in the Company. Under current legislation, tax losses may be carried forward and be set off against taxable income in the following five years.
Slovakia
The corporation tax rate is 19%. Due to tax losses sustained in the period, no tax liability arises in the Company. Under current legislation, tax losses may be carried forward and be set off against taxable income in the following years.
Spain
The corporation tax rate is 30%. Due to tax losses sustained in the period, no tax liability arises in the Company. Under current legislation, tax losses may be carried forward and be set off against taxable income in the following years. Deferred tax has been fully recognised on tax losses.
9. Loss per share
The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the parent is based on the following data:
| 2008 | 2007 | |||
| EUR 000 | EUR 000 | |||
| Net profit (loss) attributable to equity shareholders | (16,605) | (11,835) | ||
| Weighted number of ordinary shares for the purposes of basic earnings per share (000's) | 196,788 | 122,474 | ||
| Earnings per share: | ||||
| Basic and fully diluted profit (loss) per share (pence) | (8) | (10) | ||
| 10. Property, plant and equipment 2008 | Land and buildings | Plant and machinery | Motor vehicles | Furniture, fixtures and office equipment | Total | |||
| The Group | EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 | |||
| Cost | ||||||||
| At 1 January 2008 | - | 210 | 111 | 59 | 380 | |||
| Exchange difference | - | (16) | (4) | - | (20) | |||
| Additions | - | 1,993 | 111 | 8 | 2,112 | |||
| Acquisition through business combination | 1,259 | 3,938 | - | 67 | 5,264 | |||
| At 31 December 2008 | 1,259 | 6,125 | 218 | 134 | 7,736 | |||
| Depreciation | ||||||||
| At 1 January 2008 | - | 12 | 45 | 46 | 103 | |||
| Exchange difference | - | 8 | 16 | 19 | 43 | |||
| Charge for the year | - | 28 | 39 | 18 | 85 | |||
| At 31 December 2008 | - | 48 | 100 | 83 | 231 | |||
| Net book amount at 31 December 2008 | 1,259 | 6,077 | 118 | 51 | 7,505 | |||
| 2007 | ||||||||
| Cost | ||||||||
| At 1 January 2007 | - | 1 | 64 | 59 | 124 | |||
| Additions | - | 209 | 47 | - | 256 | |||
| At 31 December 2007 | - | 210 | 111 | 59 | 380 | |||
| Depreciation | ||||||||
| At 1 January 2007 | - | 1 | 27 | 25 | 53 | |||
| Charge for the year | - | 12 | 19 | 23 | 54 | |||
| Exchange difference | - | (1) | (1) | (2) | (4) | |||
| At 31 December 2007 | - | 12 | 45 | 46 | 103 | |||
| Net book amount at 31 December 2007 | - | 198 | 66 | 13 | 277 | |||
| 2008 | |||||
| The Company | EUR 000 | EUR 000 | EUR 000 | EUR 000 | EUR 000 |
| Cost At 1 January 2008 | - | 212 | 93 | 44 | 349 |
| Exchange difference | - | (54) | (31) | (12) | (97) |
| Additions | - | - | 39 | 6 | 45 |
| At 31 December 2008 | - | 158 | 101 | 38 | 297 |
| Depreciation | |||||
| At 1 January 2008 | - | 12 | 34 | 36 | 82 |
| Exchange difference | - | (8) | (14) | (10) | (32) |
| Charge for the year | - | 34 | 19 | 5 | 58 |
| At 31 December 2008 | - | 38 | 39 | 31 | 108 |
| Net book amount at 31 December 2008 | - | 120 | 62 | 7 | 189 |
| 2007 | |||||
| Cost At 1 January 2007 | - | - | 48 | 46 | 94 |
| Exchange difference | - | (13) | (6) | (2) | (21) |
| Additions | - | 225 | 51 | - | 276 |
| At 31 December 2007 | - | 212 | 93 | 44 | 349 |
| Depreciation | |||||
| At 1 January 2007 | - | - | 15 | 13 | 28 |
| Charge for the year | - | 12 | 17 | 22 | 51 |
| Exchange difference | - | 2 | 1 | 3 | |
| At 31 December 2007 | - | 12 | 34 | 36 | 82 |
| Net book amount at 31 December 2007 | - | 200 | 59 | 8 | 267 |
The above fixed assets are located in Cyprus, Spain, Slovakia and Georgia.
The value to the company of the assets located in Spain all directly related to the ability of the Group to obtain a mining licence and restart mining operations. Should the Group not be able to do either, adjustments to the carrying value of assets (tangible and intangible) will have to be made. The value of the adjustments can not be estimated at present.
11. Intangible assets
| The Group 2008 | Permits of Rio Tinto Mine | Evaluation costs of Rio Tinto Mine | Goodwill | Total | |||
| Cost | EUR 000 | EUR 000 | EUR 000 | EUR 000 | |||
| On 1 January 2008 | - | 5,285 | 890 | 6,175 | |||
| Acquisition through business combination | 1,847 | - | - | 1,847 | |||
| Additions | 162 | - | 9,333 | 9,495 | |||
| Transfer due to acquisition of EMED Tartessus S.L. | - | (5,285) | - | (5,285) | |||
| At 31 December 2008 | 2,009 | - | 10,223 | 12,232 | |||
| Provision for impairment | |||||||
| On 1 January 2008 | - | 5,285 | 890 | 6,175 | |||
| Provision for the year (Note 4) | - | - | 9,333 | 9,333 | |||
| Reversal of provision | - | (5,285) | - | (5,285) | |||
| At 31 December 2008 | - | - | 10,223 | 10,223 | |||
| Closing net book value | 2,009 | - | - | 2,009 | |||
| 2007 Cost | |||||||
| On 1 January 2007 | - | - | 794 | 794 | |||
| Additions | - | 5,285 | 96 | 5,381 | |||
| At 31 December 2007 | - | 5,285 | 890 | 6,175 | |||
| Provision for impairment | |||||||
| On 1 January 2007 | - | - | 794 | 794 | |||
| Provision for the year (Note 4) | - | 5,285 | 104 | 5,797 | |||
| Exchange difference | - | (8) | (416) | ||||
| At 31 December 2007 | - | 5,285 | 890 | 6,175 | |||
| Closing net book value | - | - | - | - |
Proyecto Rio Tinto ("Rio Tinto Mine")
On 11 May 2007, EMED Mining announced an opportunity for the Company to acquire, in stages, 100% of Rio Tinto Mine through the Company's Spanish associate EMED Tartessus S.L.
The evaluation costs of Rio Tinto Mine consist of all expenditure incurred up to 31 December 2007 that were necessary to evaluate the project and include the incorporation costs of the Spanish subsidiary EMED Tartessus S.L. These amounts were fully provided for as at 31 December 2007 since the Group had no beneficial interest if it did not exersice its option to acquire Rio Tinto Mine.
However on 30 September 2008, the Company moved to 100% ownership by acquiring the remaining 49 per cent of the issued capital of its EMED Tartessus S.L. which owns 100% of the Rio Tinto Mine. EMED Tartessus is now a wholly owned subsidiary.
This resulted in reversing last year's provision of initial evaluation costs and has formed part of the Group's cost of investment.
As part of the purchase consideration, 39,140,000 new ordinary shares of the Company were issued to MRI Investment AG, a member of the MRI Group at an issue price of 21 pence each.
This resulted in goodwill amounting to €9,333,000 which the company has fully provided for since the mining licence has not been obtained yet.
Further deferred consideration totaling up to €43,883,382 is to be paid by the EMED Group on the occurrence of the following events:-
a. €26,650,000 when both (a) the authorisation from the Junta de Andalucia to restart mining activities in the Rio Tinto Mine has been granted and (b) EMED Tartessus or another company in the EMED Group has secured senior debt finance and guarantee facilities for a sum sufficient for the acquisition and re-start of mining operations at the Mine. These milestones will effectively remain at the discretion of the Company and will not in practice be triggered until approval from the Company's shareholders has been received for the restart;
b. €13,175,000 within 20 business days following the first anniversary of the restart of mining activities at a level of 400,000 tonnes per month production of ore processing ("Restart"); and
c. €13,175,000 within 20 business days following the second anniversary of Restart.
The Company also acquired the benefit of certain loans owed to members of the MRI Group which were incurred in relation to the operation of the Rio Tinto Mine amounting to €9,116,617. These loans have been acquired at their face value, such consideration to be paid once the authorisation from the Junta de Andalucia to restart mining activities in the Rio Tinto Mine has been granted and Restart has been achieved.
Since the end of the financial year changes have been made to the above arrangements with MRI and such changes are set out in Note 26: Post Balance Sheet Events.
The funds required to make these payments, should EMED Mining proceed with the restart, would be sourced from planned banking facilities and from project cash flow.
The restart of mining operations remains subject to the following conditions:
Regulatory approvals by the Junta de Andalucia Government, support of the local community and approvals by the relevant statutory authorities in respect of performance bonds;
Settlement satisfactory to EMED Mining of the Rio Tinto Mine-vendor's liabilities, liens and contractual arrangements with a number of third parties including landholders. These various obligations arose over several years as a result of the funding of ongoing care and maintenance, bankruptcy and litigation amongst some parties;
Completion of technical due diligence for:
planning the restart of the mine, processing plant and product marketing operations, and
planning for a fast-track approach to site rehabilitation where reasonable to be undertaken concurrently with ongoing long-term production; and
completion of all due diligence to EMED Mining's satisfaction including environmental considerations and infrastructure needs.
EMED Tartessus SL has submitted its proposals for the restart of production to the Government. A shareholder meeting will be called at the appropriate time to seek approval to proceed if all conditions precedent have been met to the satisfaction of the Government and the Company.
| Goodwill on acquisition of 49% of EMED Tartessus S.L. | 30 September 2008 | |
| EUR 000 | ||
| Property, plant and equipment | 5,264 | |
| Intangible assets | 1,847 | |
| Total non-current assets | 7,111 | |
| Trade and other receivables | 498 | |
| Deferred tax asset | 1,358 | |
| Cash and cash equivalents | 689 | |
| Total current assets | 2,545 | |
| Trade and other payables | (7,099) | |
| Total current liabilities | (7,099) | |
| Net identifiable assets and liabilities | 2,557 | |
| Attributable to 49% | 1,253 | |
| Goodwill on acquisition | 9,333 | |
| Cost of acquisition, satisfied in shares | 10,586 | |
| Cash and cash equivalents acquired | (689) | |
| Net cash inflow on acquisition | 689 | |
12. Investment in subsidiaries
| 2008 | 2007 | ||
| The Company | EUR 000 | EUR 000 | |
| Opening amount at cost | 889 | 875 | |
| Exchange difference | (216) | - | |
| Additions/(Disposals) | 3,572 | 14 | |
| Closing amount at cost | 4,245 | 889 |
| Companies names | Date of acquisition/ incorporation | Country of incorporation | Effective proportion of shares held | |||
| Eastern Mediterranean Minerals (Cyprus) Ltd | 28 Feb 2005 | Cyprus | 95% | |||
| Tredington Ventures Ltd | 28 Feb 2005 | Cyprus | 95% | |||
| Winchcombe Ventures Ltd | 28 Feb 2005 | Cyprus | 95% | |||
| Eastern Mediterranean Resources (Caucasus) Ltd | 11 Nov 2005 | Georgia | 100% | |||
| Georgian Mineral Development Company Ltd | 27 Dec 2005 /11 Feb 2006 | Georgia | 100% | |||
| Eastern Mediterranean Resources A.E (Greece) | 21 June 2005 | Greece | 100% | |||
| Eastern Mediterranean Resources Armenia LLC | 26 May 2006 | Armenia | 100% | |||
| Eastern Mediterranean Resources Romania SRL | 21 Mar 2006 | Romania | 100% | |||
| Eastern Mediterranean Resources (Slovakia) S.R.O. | 10 July 2005 | Slovakia | 100% | |||
| Slovenske Kovy S.R.O. | 30 Mar 2007 | Slovakia | 100% | |||
| Slovenske Nerasty Spol S.R.O | 14 Apr 2007 | Slovakia | 100% | |||
| EMED Mining Spain S.L. | 12 Apr 2007 | Spain | 100% | |||
| EMED Tartessus S.L. | 12 Apr 2007 /30 Sep 2008 | Spain | 100% | |||
| EMED Marketing Ltd | 08 Sep 2008 | Cyprus | 100% | |||
| EMED Holding (UK) Ltd | 10 Sep 2008 | United Kingdom | 100% | |||
In 2008 the company incorporated two new fully owned subsidiaries. EMED Holding (UK) Ltd was incorporated in United Kingdom and EMED Marketing Ltd was incorporated in Cyprus.
On 30 September 2008, the Company acquired the remaining 49% of the issued capital of its EMED Tartessus which owns 100% of the Rio Tinto Mine. EMED Tartessus is now a wholly owned subsidiary.
In 2007, the Company incorporated three new fully owned subsidiaries. Slovenske Nerasty Spol S.R.O and Slovenske Kovy S.R.O. were incorporated in Slovakia, and EMED Mining Spain S.L. was incorporated in Spain.
| 13. Investment in associates | 2008 | 2007 | |
| The Group | EUR 000 | EUR 000 | |
| At 1 January | 697 | 1,076 | |
| Additions at cost | 251 | - | |
| Share of results | (449) | (695) | |
| Share of equity adjustment | - | 316 | |
| Closing amount based on equity accounting | 499 | 697 | |
| The Company At 1 January | 584 | 584 | |
| Additions | 251 | - | |
| Impairment | (205) | ||
| Closing amount at cost | 630 | 584 |
| Company name | Date of incorporation | Country of incorporation | Effective proportion of shares held |
| Kefi Minerals Public Plc | 24 October 2006 | United Kingdom | 34% |
| Amounts relating to associates: | 2008 EUR 000 | 2007 EUR 000 | |
| Total assets | 450 | 803 | |
| Total liabilities | (666) | (161) | |
| (216) | 642 | ||
| Loss for the period | (1,423) | (936) |
| 14. Inventories | 2008 EUR 000 | 2007 EUR 000 | |
| The Group and the Company Rig consumables | - | 106 |
| 15. Trade and other receivables | |||
| The Group Receivables from associates | 139 | 77 | |
| Deposits and prepayments | 1,317 | 976 | |
| VAT | 869 | 185 | |
| 2,325 | 1,238 |
| The Company | |||
| Receivables from own subsidiaries | 23,265 | 9,402 | |
| Receivables from associates | 139 | 77 | |
| Other receivables | 929 | - | |
| Deposits and prepayments | 344 | 976 | |
| VAT | 189 | 157 | |
| 24,866 | 10,612 |
| 16. Cash and cash equivalents | |||
| The Group | |||
| Cash at bank and in hand | 1,420 | 4,438 | |
| The Company | |||
| Cash at bank and in hand | 967 | 1,565 |
| 17. Share capital Authorised | Number of shares 000 | Share Capital EUR 000 | Share premium EUR 000 | Total EUR 000 | |||||||||||
| Ordinary shares of GBP0.0025 each | 400,000 | 1,000 | - | 1,000 | |||||||||||
| Issued and fully paid | 000 | EUR 000 | EUR 000 | EUR 000 | |||||||||||
| At 1 January 2007 | 92,727 | 315 | 8,497 | 8,812 | |||||||||||
| Issued 10 May 2007 at GBP0.12 | 33,333 | 113 | 5,316 | 5,429 | |||||||||||
| Issued 26 June 2007 at GBP0.1175 for purchase of services | 250 | 1 | 40 | 41 | |||||||||||
| Issued 21 September 2007 at GBP0.17 | 20,588 | 69 | 4,681 | 4,750 | |||||||||||
| Issued 21 September 2007 at GBP0.1699 under SEDA | 1,030 | 4 | 233 | 237 | |||||||||||
| Issued 21 November 2007 at GBP0.08 upon exercise of share options | 375 | 1 | 39 | 40 | |||||||||||
| Issued 3 December 2007 at GBP0.08 upon exercise of share options | 167 | - | 18 | 18 | |||||||||||
| Issued 18 December 2007 at GBP0.2164 under SEDA | 1,155 | 4 | 335 | 339 | |||||||||||
| Share issue costs | - | - | (1,105) | (1,105) | |||||||||||
| At 31 December 2007/1 January 2008 | 149,625 | 507 | 18,054 | 18,561 | |||||||||||
| Issued 7 May 2008 at GBP0.20 | 50,000 | 159 | 12,553 | 12,712 | |||||||||||
| Issued 21 May 2008 at GBP0.2456 | 104 | - | 32 | 32 | |||||||||||
| Issued 5 June 2008 at GBP0.2581 | 198 | 1 | 63 | 64 | |||||||||||
| Issued 17 June 2008 at GBP0.12 | 66 | - | 10 | 10 | |||||||||||
| Issued 1 July 2007 at GBP0.10 upon exercise of share options | 500 | 2 | 61 | 63 | |||||||||||
| Issued 18 September 2008 at GBP0.188692 | 927 | 3 | 218 | 221 | |||||||||||
| Issued 30 September 2008 at GBP0.21 | 39,140 | 123 | 10,219 | 10,342 | |||||||||||
| Share issue costs | - | - | (530) | (530) | |||||||||||
| At 31 December 2008 | 240,560 | 795 | 40,680 | 41,475 | |||||||||||
Authorised capital
Under its Memorandum the Company fixed its share capital at 1,000 ordinary shares of nominal value of CY£1 each.
On 26 May 2008 the Company passed the following special resolution:
That the authorized share capital of the Company be increased from GBP500,000 divided into 200,000,000 shares of GBP 0.0025 each, by GBP500,000 by the creation of 200,000,000 new ordinary shares of GBP0.0025 each, resulting to GBP1,000,000 divided into 400,000,000 shares of GBP0.0025 each.
Issued capital
2008
On 7 May 2008 50,000,000 shares at GBP 0.0025 were issued at a price of GBP 0.20. Upon the issue an amount of GBP9,875,000 was credited to the Company's share premium reserve.
On 21 May 2008 103,986 shares at GBP 0.0025 were issued at a price of GBP 0.2456. Upon the issue an amount of GBP25,279 was credited to the Company's share premium reserve.
On 5 June 2008 197,762 shares at GBP 0.0025 were issued at a price of GBP 0.2581. Upon the issue an amount of GBP49,955 was credited to the Company's share premium reserve.
On 17 June 2008, 66,000 shares at GBP 0.0025 were issued, upon exercise of share options, at the exercise price of GBP 0.12. Upon the issue an amount of GBP7,755 was credited to the Company's share premium reserve.
On 1 July 2008, 500,000 shares at GBP 0.0025 were issued, upon exercise of share options, at the exercise price of GBP 0.10. Upon the issue an amount of GBP48,750 was credited to the Company's share premium reserve.
On 18 September 2008 927,437 shares at GBP 0.0025 were issued at a price of GBP 0.188692. Upon the issue an amount of GBP172,681 was credited to the Company's share premium reserve.
On 30 September 2008 39,140,000 shares at GBP 0.0025 were issued at a price of GBP 0.21. Upon the issue an amount of GBP8,121,550 was credited to the Company's share premium reserve.
2007
On 10 May 2007 333,333,334 shares at GBP 0.0025 were issued at a price of GBP 0.1175. Upon the issue an amount of GBP3,916,667 was credited to the Company's share premium reserve.
On 26 June 2007 250,000 shares at GBP 0.0025 were issued at a price of GBP 0.1175. Upon the issue an amount of GBP29,375 was credited to the Company's share premium reserve.
On 21 September 2007 20,588,000 shares at GBP 0.0025 were issued at a price of GBP 0.17. Upon the issue an amount of GBP3,448,490 was credited to the Company's share premium reserve.
On 21 September 2007 1,030,109 shares at GBP 0.0025 were issued at a price of GBP 0.1699. Upon the issue an amount of GBP172,425 was credited to the Company's share premium reserve.
On 21 November 2007, 375,000 shares at GBP 0.0025 were issued, upon exercise of share options, at the exercise price of GBP 0.08. Upon the issue an amount of GBP29,063 was credited to the Company's share premium reserve.
On 3 December 2007, 166,666 shares at GBP 0.0025 were issued, upon exercise of share options, at the exercise price of GBP 0.08. Upon the issue an amount of GBP12,917 was credited to the Company's share premium reserve.
On 18 December 2007 1,155,268 shares at GBP 0.0025 were issued at a price of GBP 0.2164. Upon the issue an amount of GBP247,112 was credited to the Company's share premium reserve.
Standby Equity Distribution Agreement
On the 22 June 2007, the Company entered into a £10.0m Standby Equity Distribution Agreement ("SEDA")with Yorkville Advisors, LLC, as the Investment Advisor to YA Global Investments, L.P. ("Yorkville"), which enables the Company, at its discretion during the next 3 years, to draw down funds under the SEDA in tranches of GBP250,000 as and when it deems appropriate and in accordance with restrictions set by the terms of the Agreement.
The principal features of the SEDA are as follows:
The maximum aggregate amount of the equity line is £10,000,000 and EMED Mining is entitled to draw down the equity credit line in tranches of up to £250,000 at its option but not more frequently than every 21 days. This may increase to 35 days in certain circumstances.
The facility is for 36 months and is exercisable at any time other than when the Company is in possession of unpublished price sensitive information or monies are due and payable under the loan facility with Yorkville as described in Note 20
The Company may at its option set a minimum floor price which it wishes to accept in relation to an advance under the SEDA. Subject to compliance with the minimum floor price set by the Company, Yorkville will subscribe for new Ordinary Shares (at a discount of five per cent) at the lowest volume-weighted average price (as derived from Bloomberg) (the "VWAP") of the five trading days following EMED Mining's notice to Yorkville for it to subscribe for new Ordinary Shares.
Yorkville has agreed that it will not during such a five day pricing period sell, transfer, grant any option over or otherwise deal in the legal, beneficial or any other interest in any Ordinary Shares.
Yorkville may not refuse a notice by EMED Mining to subscribe for new Ordinary Shares provided that each time notice is given the pre-conditions have been met, which includes a requirement that warranties given by the Company have not been materially breached.
During 2007 GBP175,000 was raised under the SEDA from the issuance of 1,030,109 New Ordinary Shares at 16.99p per share and GBP250,000 from the issuance of 1,155,268 Shares at 21.64p per share.
18. Share option plan
Details of share options outstanding as at 31 December 2008:
| Grant date | Expiry date | Exercise price | Number of share options |
| GBP | 000's | ||
| 9 May 2005 | 9 May 2011 | 0.080 | 10,839 |
| 11 August 2005 | 11 August 2011 | 0.100 | 200 |
| 28 April 2006 | 28 April 2012 | 0.135 | 3,530 |
| 28 June 2006 | 28 June 2012 | 0.135 | 150 |
| 8 September 2006 | 8 September 2012 | 0.090 | 1,000 |
| 8 September 2006 | 8 September 2012 | 0.110 | 1,000 |
| 25 January 2007 | 25 January 2013 | 0.120 | 1,500 |
| 26 February 2007 | 26 February 2013 | 0.135 | 3,784 |
| 11 May 2007 | 11 May 2012 | 0.120 | 1,000 |
| 11 May 2007 | 11 May 2013 | 0.150 | 2,500 |
| 26 June 2007 | 26 June 2013 | 0.187 | 500 |
| 26 June 2007 | 26 June 2013 | 0.170 | 625 |
| 23 July 2007 | 23 July 2013 | 0.200 | 1,000 |
| 21 September 2007 | 21 September 2012 | 0.170 | 911 |
| 18 December 2007 | 18 December 2011 | 0.500 | 1,000 |
| 31 December 2007 | 31 December 2013 | 0.220 | 4,865 |
| 15 January 2008 | 14 January 2014 | 0.200 | 1,000 |
| 7 May 2008 | 6 May 2013 | 0.200 | 1,712 |
| 1 September 2008 | 1 September 2014 | 0.200 | 1,050 |
| Total | 38,166 | ||
| Number of shares 000's | ||
| Outstanding options at 31 December 2007: | 34,970 | |
| - granted during 2008 | 3,762 | |
| - exercised during 2008 | (566) | |
| Outstanding options at 31 December 2008 | 38,166 |
The Company has issued share options to directors, employees and suppliers of the Group. All options, except those noted below, expire six years after grant date and are exercisable at the exercise price in whole or in part up to one third in the first year from the grant date, two thirds in the second year from the grant date and the balance thereafter.
2008
On 7 May 2008, 1.28 million options were issued to Fox Davies Capital which expire five years after the grant date, and are exercisable at any time within that period.
On 7 May 2008, 0.33 million options were issued to GMP Securities Europe LLP which expire five years after the grant date, and are exercisable at any time within that period.
On 7 May 2008, 0.1 million options were issued to Lewis Charles Securities Limited which expire five years after the grant date, and are exercisable at any time within that period.
2007
On 11 May 2007, 1 million options were issued to Fox Davies Capital which expire five years after the grant date, and are exercisable at any time within that period.
On 11 May 2007, 2.5 million options were issued to the Managing Director. These options vested when the Company exercised its option over Rio Tinto Mine. The options expire six years after the date of issue and can be exercised at any time during this period once they have vested.
On 26 June 2007, 1.25 million options were issued that expire six years after the grant date, and are exercisable at any time within that period.
On 23 July 2007, 1 million options were issued to the Finance Director. These options vested when the Company exercised its option over Rio Tinto Mine. The options expire six years after the date of issue and can be exercised at any time during this period once they have vested.
On 21 September 2007, 0.911 million options were issued that expire five years after the grant date, and are exercisable at any time within that period.
On 18 December 2007, 1 million options were issued to YA Global Investments LP which expire four years after the grant date, and are exercisable at any time within that period.
The option agreements 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.
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:
| Weighted average share price | Weighted average exercise price | Expected volatility | Expected life (years) | Risk free rate | Expected dividend yield | Discount factor | Estimated fair value | |
| 1 Sep. 2008 | 21.50p | 20.00p | 68.16% | 6 | 5.00% | Nil | 30% | 10.07p |
| 7 May 2008 | 23.75p | 20.00p | 69.36% | 5 | 4.98% | Nil | 30% | 10.82p |
| 15 Jan. 2008 | 19.75p | 23.80p | 65.96% | 6 | 4.98% | Nil | 30% | 8.35p |
| 31 Dec. 2007 | 22.00p | 22.00p | 65.96% | 6 | 4.27% | Nil | 30% | 9.76p |
| 18 Dec. 2007 | 19.00p | 50.00p | 65.42% | 4 | 4.27% | Nil | 30% | 3.85p |
| 21 Sept. 2007 | 17.00p | 17.00p | 61.93% | 5 | 5.00% | Nil | 30% | 6.47p |
| 23 Jul. 2007 | 14.00p | 20.00p | 57.88% | 6 | 6.35% | Nil | 30% | 5.13p |
| 26 Jun. 2007 | 13.50p | 18.66p | 57.88% | 6 | 6.32% | Nil | 30% | 5.09p |
| 26 Jun. 2007 | 13.50p | 17.00p | 57.88% | 6 | 6.32% | Nil | 30% | 5.30p |
| 11 May 2007 | 13.25p | 12.00p | 57.88% | 5 | 6.07% | Nil | 30% | 5.43p |
| 11 May 2007 | 13.25p | 15.00p | 57.88% | 6 | 6.07% | Nil | 30% | 5.37p |
| 26 Feb. 2007 | 11.83p | 13.50p | 60% | 6 | 5.85% | Nil | 30% | 4.19p |
| 25 Jan. 2007 | 11.10p | 12.00p | 57.88% | 6 | 5.97% | Nil | 30% | 4.56p |
| 8 Sept. 2006 | 9.00p | 11.00p | 46% | 6 | 4.90% | Nil | 20% | 5.51p |
| 8 Sept. 2006 | 9.00p | 9.00p | 46% | 6 | 4.90% | Nil | 20% | 5.86p |
| 28 Jun. 2006 | 9.50p | 13.50p | 37% | 6 | 4.80% | Nil | 20% | 3.30p |
| 28 Apr. 2006 | 9.50p | 13.50p | 37% | 6 | 4.70% | Nil | 20% | 3.25p |
| 11 Aug. 2005 | 8.88p | 10.00p | 20% | 6 | 4.40% | Nil | 20% | 3.18p |
| 9 May 2005 | 8.75p | 8.00p | 15% | 6 | 4.40% | Nil | 20% | 2.50p |
Expected volatility was determined by calculating the historical volatility of the Company's share price over the period since the Company was admitted to trading on AIM.
19. Trade and other payables
| 2007 | 2006 | ||
| The Group | EUR 000 | EUR 000 | |
| Trade payables | 1,639 | 771 | |
| Accruals | 96 | 31 | |
| 1,735 | 802 | ||
| The Company | |||
| Trade payables | 1,098 | 771 | |
| Accruals | 12 | 31 | |
| 1,110 | 802 |
20. Borrowings
| Current borrowings | |||
| Other loans | 2,410 | 410 |
| Non-current borrowings | |||
| Other loans | 308 | 3,007 |
| Maturity of non-current borrowings | |||
| Between one to two years | 308 | - | |
| Between two and five years | - | 3,007 | |
| After five years | - | - | |
| 308 | 3,007 |
On 18 December 2007, the Company entered into a loan facility with YA Global Investments ('YA') under the following terms.
The cash advance available under the facility was $4.7 million (after fees and costs of $ 300,000) at an interest rate of 8.0% per annum and this was drawn down on 20 December 2007. As at 31 December 2008 the balance outstanding was $ 3.85 million.
Loan repayments can be made in cash or shares at EMED Mining's election over 18 monthly installments. If an installment is made by way of shares, the repayment share price is the lower of 25.51p (the "Conversion Price") being 120 per cent of the average of the volume weighted average prices for the 5 consecutive trading days immediately prior to the date the loan was drawn down or 95% of the lowest daily weighted average market price over two alternative 5 day periods prior to the repayment.
The Company can elect to repay part or all of any advance early in cash subject to an early repayment fee of 8.0% of the amount so paid. YA can, subject to certain restrictions, elect to convert the debt into shares at any time at the Conversion Price of 25.51p. In this event, the Company can either issue the shares or pay to YA the cash equivalent of the Conversion Price, plus the amount by which the weighted average market price over a 5 day period at the time exceeds the Conversion Price.
Since the end of the financial year changes have been made to arrangements with YA and such changes are set out in Note 26: Post Balance Sheet Events.
The Company is obliged, if requested by YA, to apply 20% of any amount over $15million raised in the future to reduce any loan amount outstanding. In addition, drawdowns of the SEDA facility (see Note 17) are unavailable until any loan advance under this loan facility is repaid.
21. Acquisition of subsidiaries
2008
In 2008 the company incorporated two new fully owned subsidiaries. EMED Holding (UK) Ltd was incorporated in United Kingdom and EMED Marketing Ltd was incorporated in Cyprus.
The share capital for the incorporation of the two subsidiaries was paid in cash as follows:
| EUR 000 | |
| EMED Marketing Ltd | 2 |
| EMED Holding (UK) Ltd | 3,570 |
| 3,572 |
2007
In 2007, the Company incorporated three new fully owned subsidiaries. Slovenske Nerasty Spol S.R.O and Slovenske Kovy S.R.O. were incorporated in Slovakia, and EMED Mining Spain S.L. was incorporated in Spain.
The share capital for the incorporation of the three subsidiaries was paid in cash as follows:
| EUR 000 | |
| Slovenske Nerasty Spol S.R.O | 6 |
| Slovenske Kovy S.R.O. | 5 |
| EMED Mining Spain S.L. | 3 |
| 14 |
22. Discontinued operations
There were no discontinued operations during 2008.
23. Related party transactions
The following transactions were carried out with related parties:
23.1 Compensation of key management personnel
The total remuneration of the Directors and other key management personnel was as follows:
| 2008 | 2007 | ||
| EUR 000 | EUR 000 | ||
| Directors' fees | 479 | 510 | |
| Share-based benefits to directors | 239 | 386 | |
| Other key management personnel fees | 405 | 418 | |
| Share-based benefits to other key management personnel | 129 | 136 | |
| 1,252 | 1,450 |
Share-based benefits
The directors and key management personnel have been granted options as set out in Note 18.
23.2 Transactions with KEFI Minerals.
The company has an ongoing service agreement with KEFI Minerals plc for provision of management and other professional services.
| 2008 | 2007 | ||
| EUR 000 | EUR 000 | ||
| Transactions with KEFI Minerals | 63 | 73 |
24. Contingent liabilities
As part of the acquisition cost of a 95% share in Eastern Mediterranean Minerals (Cyprus) Limited, an additional contingent consideration of €616,200 is payable by the Company one month after the date on which Eastern Mediterranean Minerals (Cyprus) Limited first receives revenue of €1,027,000 from or in respect of specific exploration tenements.
25. Capital commitments
The Group has undertaken a capital commitment, for exploration in Slovakia amounting to SKK29,300,000 (EUR 972,467) over 2006 to 2009. The Group's exploration costs since 2006 and the budget for the following years exceed the amount of this capital commitment.
26. Post balance sheet events
Bridging Finance Loan
On 10 February 2009 the Company entered into arrangements with Resource Capital Fund IV L.P ("RCF") and RMB Australia Holdings Limited ("RMB"), two of its existing shareholders, for the provision of $1million bridging finance in the form of promissory notes.
The bridging finance was an interim measure to provide ongoing working capital to the Company pending the completion of arrangements of the Convertible Note Facility (see below). Interest was 7.5% per annum and the amount was repayable on demand. As security for the bridging finance, the Company granted a charge over the shares in its subsidiary EMED Holdings (UK) Limited in favour of RCF as trustee for itself and RMB and YA Global Investments, L.P.('YA').
The Bridging Finance Loan was subsequently repaid in full from the Convertible Note Facility.
Convertible Loan Facility
On the 4 March 2009 the Company entered into a Convertible Loan Agreement with RCF and RMB to provide a borrowing facility of up to $8.5 million (the 'Facility'). RCF will provide up to $6.5 million under the Facility and RMB up to $2 million. The Facility, which was subject to approval by shareholders, is divided into two tranches of which Tranche A comprises $2 million and Tranche B up to $6.5 million.
The Facility was arranged to provide funds for repaying the Bridging Finance Loan; the Rio Tinto copper project in Spain and gold projects in Slovakia; and for general working capital purposes.
Pursuant to the resolution approving the Convertible Loan at the Extraordinary Shareholders Meeting held on 23 March, 2009, Tranche A was drawn down on 2 April, 2009. These funds were used to repay the Bridging Finance Loan and to provide additional working capital. The availability of Tranche B funds is conditional upon the lenders being satisfied that the Group has achieved progress on a number of commercial issues associated with the development of the Group's projects. On 27 April, 2009 the Company made a drawdown of the Tranche B facility of $2 million.
Loans made under the Facility are repayable on or prior to 31 December 2011. Amounts drawn down under the Facility may be converted at the discretion of each Lender into Ordinary Shares at the Conversion Price of 4.13 pence per Ordinary Share.
Interest is payable at a rate of 7.5% on funds drawn down with an annual commitment fee of 3.0 % on any undrawn amounts. The establishment fee was $212,500 paid by the issue of 3,785,274 new Ordinary Shares at a price of 3.969 pence per share. Interest can be paid in cash or shares at the election of the Company or the Lenders. In the case of shares, the price of such shares will be based upon the volume weighted average market price at the time of the payment.
Loans under the Facility are secured against the shares of the Company's subsidiaries, the Company's principal bank account, and certain assets of the Company's Slovakian subsidiaries.
The drawdown of the Facility is subject to the warranties made by the Company and certain of its subsidiaries, no event of default outstanding at the date of drawdown and the Company not suffering any material adverse effect.
Changes to the YA Loan Agreement
On 18 December, 2007 the Company entered into an agreement with YA Global Investments L.P. ("YA") to provide a loan of $5 million. Since then $1.14 million has been repaid leaving a balance at 31 December 2008 of $3.85 million. A condition of the loan was a requirement to obtain YA consent for any additional financing by the Company.
YA consented to the Convertible Loan Facility subject to the amendment of its existing arrangements. Following the approval of shareholders on 23 March 2009, the amendments made grant YA (i) the right to convert any outstanding loan amounts into ordinary shares at 4.13 pence per ordinary share, (ii) security equivalent to the Convertible Loan holders (iii) certain cross-default provisions and (iv) changed the subscription price relating to its right to subscribe for one million ordinary shares from 50 pence per share to 5 pence per share.
Since year end the Company has repaid a further $0.6 million of the YA Loan by issuing 10.9 Million shares at an average price of 3.8 pence which is based upon a weighted market average at the time of the repayment. The balance of the loan of $3.25 million can be repaid using cash or shares at the election of the Company.
Changes to the MRI Agreements
On 30 September 2008, the Company acquired from MRI and its associated companies (the "MRI Group") the remaining 49 per cent of the share capital of its subsidiary EMED Tartessus, thereby acquiring 100 per cent ownership of EMED Tartessus which owns 100 per cent of the Rio Tinto project (see note 11).
Pursuant to the arrangements entered into with the MRI Group, EMED Tartessus is obliged to pay up to a further €53 million of deferred payments in the following instalments:
€26,650,000 when both (i) the authorisation from the Junta de Andalucia to restart mining activities at the Rio Tinto project has been granted and (ii) senior debt finance has been secured for the acquisition and re-start of mining operations at the Rio Tinto project ("First Payment Date");
€13,175,000 following the first anniversary of the restart of mining activities at the Rio Tinto project at an agreed level ("Restart"); and
€13,175,000 following the second anniversary of Restart.
Under the revised arrangements approved by the Company's shareholders on 23 March 2009, the payment to be made on the First Payment Date will be €8,833,333 with the balance of the consideration being paid in equal annual or quarterly installments over the following six years (the "Payment Period").
In consideration for agreeing to defer the above installments and for MRI's consent to the arrangements being entered into in connection with the Convertible Loan Facility, the Company agreed to potentially pay further deferred consideration of up to €15,900,000 in regular installments over the Payment Period depending upon the price of copper. Any such additional payment will only be made if, during the relevant period, the average price of copper per tonne is $6,613.86 or more. ($3.00/lb).
For these purposes, the average price of copper per tonne shall be calculated by reference to the London Metal Exchange Copper Grade A Cash Seller and Settlement price of copper adjusted, where relevant, for the price of copper per tonne in any agreements entered into by EMED or its subsidiaries to hedge their exposure to variations in the price of copper.
Increase in Authorised Capital
On 23 March 2009 shareholders approved an increase in the authorised share capital of the Company from £1,000,000 to £1,500,000 by the creation of 200,000,000 new ordinary shares of £0.0025 each in the capital of the Company ranking pari passu with the existing ordinary shares of £0.0025 each in the capital of the Company.
Issue of Options
On 23 March 2009 shareholders approved the issue of options as set out below.
Further to the original arrangements with MRI referred to above, MRI has been granted (i) an option to subscribe at any time until 30 September 2010 for up to 1,000,000 Ordinary Shares at a subscription price per Ordinary Share of 24.5p; and (ii) an option to subscribe at any time until 30 September 2010 for up to 1,000,000 Ordinary Shares at a subscription price per Ordinary Share of 28p.
In addition, each of the Directors and certain of the management and employees have been or are to be granted options to subscribe at any time until 23 March 2013 for an aggregate total of 10,000,000 Ordinary Shares at an exercise price per Ordinary Share of 4.13 pence.
The cash remuneration of the Directors and the Company's senior executives has been significantly reduced and options are being granted to compensate for this reduction and provide an appropriate performance incentive whilst conserving the Group's cash.
Details of the Options granted to each Director and their revised option entitlements are set out below.
| Existing | New | Aggregate | |
| Name | Options | Options | Options |
| R Beevor | 2,350,000 | 1,000,000 | 3,350,000 |
| A Anagnostaras- Adams | 11,000,000 | 2,000,000 | 13,000,000 |
| J Leach | 2,050,000 | 1,500,000 | 3,550,000 |
| G Toll | 1,650,000 | 500,000 | 2,150,000 |
| A Mehra | - | 500,000 | 500,000 |
| R Bhappu | - | 500,000 | 500,000 |
The existing options referred to above have been granted at exercise prices of between 8 pence and 22 pence per Ordinary Share.
An option was also granted to a consultant for up to 750,000 new Ordinary Shares at an exercise price of 5p per Ordinary Share, expiring on 23 March, 2011 exercisable only after satisfactory settlement of certain commercial matters and successful project permitting in Spain.