Atalaya Mining Regulatory News (ATYM)

21 Apr 2008 07:01

EMED Mining Public Limited21 April 2008 AIM: EMED 21 April 2008 EMED MINING PUBLIC LIMITED ("EMED Mining" or the "Company") Final Results for the year ended 31 December 2007 EMED Mining announces its final audited results for the year ended 31 December2007. Highlights • Net working capital of £3.367 million (2006: £1.419 million) • Copper: Option to acquire the Rio Tinto Mine in Spain • Gold: Biely Vrch Prospect, Slovakia drill-tested and found to be gold porphyry system Post-period highlights • Encouraging progress continued to be made toward restart at Rio Tinto Mine • Encouraging mineralization in 3rd porphyry gold target in Slovakia Harry Anagnostaras-Adams, Managing Director of EMED Mining, commented: "EMED Mining has made excellent progress on our existing goals in 2007, as wellas finding new potential especially at our existing sites in Slovakia. Wecontinue to work toward triggering our option to acquire and restart copperproduction at the Rio Tinto Mine in Spain, and we are cautiously optimistic thatour conditions precedent will be satisfied." EMED Mining's full financial statements and Annual Report are available on theCompany's website, www.emed-mining.com -Ends- EnquiriesEMED Mining RFC Corporate FinanceHarry Anagnostaras-Adams Stuart Laing+357 9945 7843 +61 8 9480 2500www.emed-mining.comwww.emed.tv Fox-Davies Capital Parkgreen CommunicationsRichard Hail Justine Howarth / Erica Nelson+44 207 936 5220 +44 20 7851 7480 For further information on the Company's activities, visit www.emed-mining.comor www.emed.tv. REPORT OF THE BOARD OF DIRECTORS The Board of Directors presents its report for EMED Mining Public Limited(previously Eastern Mediterranean Resources Public Limited) ("EMED Mining") andits subsidiaries (the "Group") together with the financial statements of theGroup for the year ended 31 December 2007. Incorporation and Principal activity EMED Mining was incorporated in Cyprus on 17 September 2004 and is a companywith limited liability under the Companies Law of Cyprus, Cap. 113. The Companywas listed on the Alternative Investment Market ("AIM") of the London StockExchange in May 2005. The principal activity of the Group is to explore for and develop naturalresources, with a focus on base and precious metals in particular belts ofmineralization spanning through Europe, the Middle East and Central Asia. Review of Operations The Company has developed a balanced portfolio of geographically diverseopportunities across a range of countries. EMED Mining has targeted specificprojects: its option to acquire the Rio Tinto Mine in Spain; the Biely Vrch goldproject in Slovakia; the Klirou District copper project in Cyprus andexploration prospecting in the Republic of Georgia. The Rio Tinto Mine project involves restarting the existing open pit mine,copper concentrator and infrastructure. Current estimates of total finance required for the Rio Tinto Mine remainconsistent with previously published figures of £55-85 million depending uponthe speed with which the Company assumes and settles 100% ownership. Financeplans are focused on the following approach: • minimising expenditure pending the exercise of the option. The Company has so far avoided committing to any counterparty settlements; • all pre-permitting financing to be by way of equity or advances repayable with equity, to minimise finance risk; • exercising the option upon receipt of regulatory approval; and • post-permitting financing to be mainly by way of debt, so as to minimise equity dilution for EMED Mining shareholders given the potential rapid payback of investment. During 2007 exploration focused on drilling the Biely Vrch Prospect and morerecently two other prospects within the Detva Tenement, Kralova and SlatinskeLazy, both of which have been drill tested. The recognition of the Biely VrchProspect to be a gold porphyry system has considerably enhanced the explorationpotential of the tenements held by EMED Mining. EMED Mining is the holder of the largest exploration/mining tenement in theRepublic of Georgia. To date two field seasons of exploratory prospecting havebeen completed on this tenement, but EMED Mining has yet to find a prospectworthy of drill testing. In Cyprus, due to rising base metal prices, the exploration effort was refocusedon the evaluation of known shallow low grade deposits and extensions to oldabandoned mining operations, as these prospects had historically been ignored orclosed due to then low metal prices. Results As at 31 December 2007, EMED Mining had net working capital of £3.367 million(2006: £1.419 million) and listed shares that had a market value of £1.2million. The company's market capitalisation was £32.2 million as at 31 December 2007. During 2007, EMED Mining incurred exploration expenditure of £2.451 million(2006: £1.926 million) and net operating expenditure of £1.052 million (2006:£0.384 million). EMED Mining has taken a conservative approach in its accounting policy towardsexploration expenditure - all such expenditures are written off on acquisitionor when incurred pending Directors' decision to commence project development. This policy is a major factor in EMED Mining recording a net loss for the yearof £8.294 million (2006: £2.627 million) after minority interests. 2007 2006 GBP 000's GBP 000's- Exploration Expenditure 2,451 1,926- Evaluation costs of Rio Tinto Mine 3,894 -- Net Operating Expenditure 1,052 384- Shareholder communications and ongoing listing costs 302 251- Share-based benefits 524 186- Amortisation of goodwill 71 -- Loss from discontinued operations - 208- Gain on disposal of subsidiaries - (328)- Loss for the period 8,294 2,627 Share Capital Authorised and issued capital Details on authorised and issued share capital are disclosed in Note 17 of thefinancial statements. Directors' Interests The interests of the Directors and their immediate families (all of which arebeneficial unless otherwise stated) and of persons connected with them inOrdinary Shares as at the date of this report are as follows: 2006 2007 Number of % of Number of existing issued ExistingName ordinary share Ordinary % of issued shares capital shares share capital '000 '000Ronnie Beevor 5,450 3.6% 4,450 4.8%Harry 4,900 3.3% 4,900 5.3% Anagnostaras-AdamsJohn Leach 710 0.5% - -Gordon Toll 4,667 3.1% 2,500 2.7%Michael Price - - - -Andreas Panayiotou N/A N/A - - The Directors to whom options over Ordinary Shares have been granted and thenumber of Ordinary Shares subject to such Options are as follows: Grant Date Expiration Exercise Ronnie Harry John Gordon Michael Andreas Date Price Beevor Anagnostaras- Leach Toll Price Panayiotou Adams '000 '000 '000 '000 '000 '0009-May-05 9-May-11 8.0p 1,250 5,000 - 1,250 - 62528-Apr-06 28-Apr-12 13.5p 200 1,500 150 200 - -26-Feb-07 26-Feb-13 13.5p 500 1,000 300 - - -11-May-07 11-May-13 15.0p - 2,500 - - - -26-Jun-07 26-Jun-13 17.0p - - - - 500 -23-Jul-07 23-Jul-13 20.0p - - 1,000 - - -27-Jul-07 27-Jul-13 10.0p - - 200 - - -31-Dec-07 31-Dec-13 22.0p 400 1,000 400 200 200 - 2,350 11,000 2,050 1,650 700 625 All options, except those noted below, expire six years after grant date and areexercisable at the exercise price in whole or in part no more than one third oneyear from the grant date, two thirds after two years from the grant date and thebalance after three years from the grant date. On 11 May 2007, 2.5 million options were issued to the Managing Director. Theseoptions vest only if the Company exercises its option over the Rio Tinto Mine.The options expire six years after the date of issue and can be exercised at anytime after vesting. On 23 July 2007, 1 million options were issued to the Finance Director. Theseoptions vest only if the Company exercises its option over the Rio Tinto Mine.The options expire six years after the date of issue and can be exercised at anytime after vesting. On 20 April 2008, the Board of Directors of EMED MINING PUBLIC LIMITEDauthorized these financial statements for issue. A. Anagnostaras-Adams Director CONSOLIDATED STATEMENT OF OPERATIONSYear ended 31 December 2007 2007 2006 Notes GBP'000 GBP'000 Revenue - -Exploration costs (2,451) (1,926)Evaluation costs of Rio Tinto Mine (3,894) -Gross loss (6,345) (1,926)Administration expenses (1,489) (806)Provision for impairment of goodwill (71) -Share of results of associates (512) (31)Operating loss 4 (8,417) (2,763)Gain on disposal of subsidiaries - 328Finance income 6 62 8Finance costs 7 (19) (21)Loss before tax (8,374) (2,448)Tax 8 - (1)Net loss for the year from continuing operations (8,374) (2,449)Discontinued operations:Loss for the year from discontinued operations - (208)Net loss for the year (8,374) (2,657)Attributable to:Equity holders of the parent (8,294) (2,627)Minority interest (80) (30)Net loss for the period (8,374) (2,657) Loss per share (pence) 9 (6.84) (2.87) BALANCE SHEET31 December 2007 The The The The Group Company Group Company 2007 2007 2006 2006 Notes GBP'000 GBP'000 GBP'000 GBP'000ASSETSNon-current assetsProperty, plant and equipment 10 204 197 52 43Intangible assets 11 - - 71 -Investments in subsidiaries 12 - 655 - 645Investments in associates 13 514 430 793 430 718 1,282 916 1,118Current assetsInventories 14 78 78 - -Trade and other receivables 15 912 7,820 536 3,169Cash at bank and in hand 16 3,270 1,153 1,207 1,135 4,260 9,051 1,743 4,304Total assets 4,978 10,333 2,659 5,422 EQUITY AND LIABILITIESCapital and reservesShare capital 17 374 374 232 232Share premium 17 13,303 13,303 6,261 6,261Share options reserves 18 818 818 294 294Accumulated losses (12,546) (7,271) (4,400) (1,689)Total equity attributable to equity holders of the parent 1,949 7,224 2,387 5,098Minority interest (80) - (52) -Total equity 1,869 7,224 2,335 5,098 Non-current liabilitiesBorrowings 20 2,216 2,216 - - Current liabilitiesTrade and other payables 19 591 591 324 324Borrowings 20 302 302 - - 893 893 324 324Total liabilities 3,109 3,109 324 324Total equity and liabilities 4,978 10,333 2,659 5,422 CONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended 31 December 2007 Share Share Share Accumulated Equity Exchange Total capital premium options losses reserve Difference reserve reserve GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 At 1 January 2006 141 2,886 108 (2,142) - - 993 Net loss for the year - - - (2,657) - - (2,657) Minority interest - - - 30 - - 30 Issue of share capital 91 3,589 - - - - 3,680 Share issue costs - (214) - - - - (214) Recognition of share - - 186 - - - 186 based payments Share of equity - - - - 394 - 394 adjustments in associates Exchange difference - - - - - (25) (25) on translation of subsidiariesAt 31 December 2006/ 232 6,261 294 (4,769) 394 (25) 2,387 1 January 2007 Net loss for the year - - - (8,374) - - (8,374) Minority interest - - - 28 - - 28 Issue of share capital 142 7,856 - - - - 7,998 Share issue costs - (814) - - - - (814) Recognition of share based payments - - 524 - - - 524 Share of equity adjustments - - - - 233 - 233 in associates Exchange difference on translation of subsidiaries - - - - - (33) (33) 374 13,303 818 (13,115) 627 (58) 1,949 CONSOLIDATED CASH FLOW STATEMENTYear ended 31 December 2007 2007 2006 Notes GBP'000 GBP'000CASH FLOWS FROM OPERATING ACTIVITIESLoss before tax (8,374) (2,448)Adjustments for:Depreciation of property, plant and equipment 10 37 17Provision for impairment of goodwill 11 71 -Share-based benefits 18 524 186Acquisition of data with settlement in shares - 408Purchase of services with settlement in shares 15 -Share of loss from associates 512 (31)Profit on disposal of subsidiaries - (328)Interest income 6 (2) (8)Exchange difference on translation of subsidiaries (48) (113)Operating loss before working capital changes (7,265) (2,255)Changes in working capital:Inventories (78) -Trade and other receivables (376) (490)Trade and other payables 267 216Cash flows used in operations (187) (2,529)Tax paid - (1)Net cash used in operating activities (7,452) (2,530) CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment 10 (189) (28)Acquisition of subsidiaries 21 - (114)Acquisition of associate - (130)Disposal of subsidiaries - (28)Interest received 2 8Net cash used in investing activities (187) (292) CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of share capital 7,998 3,272Listing and issue costs (814) (214)Proceeds from borrowings 2,518 -Net cash from financing activities 9,702 3,058 Net increase in cash and cash equivalents 2,063 236Cash and cash equivalents:At beginning of the period 16 1,207 971At end of the period 16 3,270 1,207 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 31 December 2007 1. Incorporation and principal activities Country of incorporation EMED Mining Public Limited (the "Company") was incorporated in Cyprus on 17September 2004 as a private company with limited liability under the CompaniesLaw, Cap. 113 and was converted to a public limited liability company at 26January 2005. Its registered office is at , 1 Lambousa Street, Nicosia, Cyprus.The Company was listed on the Alternative Investment Market ("AIM") of theLondon Stock Exchange in May 2005. Principal activities The principal activity of the Company and its subsidiaries ("the Group") is toexplore for and develop natural resources, with a focus on base and preciousmetals in the regions of Western and Central Europe, the Middle East andWestern Asia. 2. Accounting policies The principal accounting policies adopted in the preparation of these financialstatements are set out below. These policies have been consistently appliedthroughout the period presented in these financial statements unless otherwisestated. Basis of preparation The consolidated financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRSs) as adopted by the EuropeanUnion (EU) and the requirements of the Cyprus Companies Law, Cap.113. Theconsolidated financial statements have been prepared under the historical costconvention. Going concern The Directors have formed a judgment at the time of approving the financialstatements that there is a reasonable expectation that the company has adequateresources to continue in operational existence for the foreseeable future. The financial information has been prepared on the going concern basis, thevalidity of which depends principally on the discovery of economically viablemineral deposits and the availability of subsequent funding to extract theresource or alternatively the availability of funding to extend the Company'sexploration activities. The financial information does not include anyadjustment that would arise from a failure to complete either option. Adoption of new and revised International Financial Reporting Standards (IFRSs) During the current year the Group adopted all the new and revised IFRSs andInternational Accounting Standards (IAS), which are relevant to its operationsand are effective for accounting periods commencing on 1 January 2007. The adoption of these Standards did not have a material effect on theconsolidated financial statements. At the date of authorisation of these financial statements some Standards werein issue but not yet effective. The Board of Directors expects that the adoptionof these Standards in future periods will not have a material effect on theconsolidated financial statements of the Group. Basis of consolidation The consolidated financial statements incorporate the financial statements ofthe Company and entities (including special purpose entities) controlled by theCompany (its subsidiaries). Control is achieved where the Company has the powerto govern the financial and operating policies of an entity so as to obtainbenefits from its activities. The financial statements of all the Group companies are prepared using uniformaccounting policies. All inter-company transactions and balances between Groupcompanies have been eliminated during consolidation. Acquisitions The acquisition of subsidiaries is accounted for using the purchase method. Thecost of the acquisition is measured at the aggregate of the fair values, at thedate of exchange, of assets given, liabilities incurred or assumed, and equityinstruments issued by the Group in exchange for control of the acquiree, plusany costs directly attributable to the business combination. The acquiree'sidentifiable assets, liabilities and contingent liabilities that meet theconditions for recognition under IFRS 3 are recognised at their fair values atthe acquisition date, except for non-current assets (or disposal groups) thatare classified as held for sale in accordance with IFRS 5 Non-Current AssetsHeld for Sale and Discontinued Operations, which are recognised and measured atfair value less costs to sell. Goodwill Purchased goodwill is capitalized and classified as an asset on the balancesheet. Goodwill arising on acquisition is recognised as an asset and initiallymeasured at cost, being the excess of the cost of the business combination overthe 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 directorsconsider the initial value of the acquisition to be negligible, the goodwill iswritten off to the Income Statement immediately. Trading results of acquiredsubsidiary undertakings are included from the date of acquisition. Goodwill is deemed to be impaired when the present value of the future cashflows expected to be derived is lower than the carrying value. Any impairmentis charged to the Income Statement immediately. Investments in subsidiary companies Investments in subsidiary companies are stated at cost less provision forimpairment in value, which is recognised as an expense in the period in whichthe impairment is identified. Investments in associate companies Associates are all entities over which the Group has significant influence butnot control, generally accompanying a shareholding of between 20% and 50% of thevoting rights. Investments in associates are initially recognized at cost and are accounted forby 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 effectiveinterest method. Finance costs Interest expense and other borrowing costs are charged to the income statementas incurred. Foreign currency translation(1) 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''). The financial statements are presented in British pounds (GBP), which is the Group's functional and presentation currency. (2) 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. (3) 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 aremeasured at the amount expected to be paid to or recovered from the taxationauthorities using the tax rates and laws that have been enacted or substantivelyenacted by the balance sheet date. Deferred tax is provided in full, using the liability method, on temporarydifferences arising between the tax bases of assets and liabilities and theircarrying amounts in the financial statements. Currently enacted tax rates areused in the determination of deferred tax. Deferred tax assets are recognised to the extent that it is probable that futuretaxable profit will be available against which the temporary differences can beutilised. Deferred tax assets and liabilities are offset when there is a legallyenforceable right to set off current tax assets against current tax liabilitiesand when the deferred taxes relate to the same fiscal authority. Acquisitions of assets All assets acquired, including property, plant and equipment other than goodwilland intangibles, are initially recorded at their cost of acquisition at the dateof acquisition, being the fair value of the consideration provided plusincidental costs directly attributable to the acquisition. When equity instruments are issued as consideration, their market price at thedate of acquisition is used as fair value, except where the notional price atwhich they could be placed in the market is a better indication of fair value.Transaction costs arising on the issue of equity instruments are recogniseddirectly in equity subject to the extent of proceeds received, otherwiseexpensed. Property, plant and equipment Property, plant and equipment are stated at historical cost less depreciation. Depreciation is calculated on the straight-line method to write off the cost ofeach asset to their residual values over their estimated useful life. The annualdepreciation 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 ifappropriate, at each balance sheet date. Where the carrying amount of an asset is greater than its estimated recoverableamount, it is written down immediately to its recoverable amount. Expenditure for repairs and maintenance of property, plant and equipment ischarged to the income statement of the year in which they were incurred. Thecost of major renovations and other subsequent expenditure are included in thecarrying amount of the asset when it is probable that future economic benefitsin excess of the originally assessed standard of performance of the existingasset will flow to the Group. Major renovations are depreciated over theremaining useful life of the related asset. Gains and losses on disposal of property, plant and equipment are determined bycomparing proceeds with carrying amount and are included in profit fromoperations. Share capital Ordinary shares are classified as equity. Exploration costs The Group has adopted the provisions of IFRS6 "Exploration for and Evaluation ofMineral Resources". The Group's stage of operations as at the year end and as atthe date of approval of these financial statements have not yet met the criteriafor capitalization of exploration costs. Share-based compensation benefits IFRS 2 "Share-based Payment" requires the recognition of equity-settled share-based payments at fair value at the date of grant and the recognition ofliabilities for cash-settled share-based payments at the current fair value ateach balance sheet date. The fair value is measured using the Black Scholes pricing model. The inputsused in the model are based on management's best estimate, for the effects ofnon-transferability, exercise restrictions and behavioural considerations. For 2007, the impact of share-based payments was a net charge to income ofGBP524,687. At 31 December 2007, the equity reserve recognized for share basedpayments amounted to GBP818,330. For 2006, the impact of share-based payments was a net charge to income ofGBP185,470. At 31 December 2006, the equity reserve recognized for share basedpayments amounted to GBP293,643. 2. Accounting policies (continued) Use and revision of accounting estimates The preparation of the financial report requires the making of estimations andassumptions that affect the recognised amounts of assets, liabilities, revenuesand expenses and the disclosure of contingent liabilities. The estimates andassociated assumptions are based on historical experience and various otherfactors that are believed to be reasonable under the circumstances, the resultsof which form the basis of making the judgments about carrying values of assetsand liabilities that are not readily apparent from other sources. Actual resultsmay 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 theestimate is revised if the revision affects only that period, or in the periodof the revision and future periods if the revision affects both current andfuture periods. Financial instruments Financial assets and financial liabilities are recognised on the Group's balancesheet when the Group becomes a party to the contractual provisions of theinstrument. Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents comprisecash at bank and in hand. Borrowings Borrowings are recorded initially at the proceeds received, net of transactioncosts incurred. Borrowings are subsequently stated at amortised cost. Anydifferences between the proceeds (net of transaction costs) and the redemptionvalue is recognised in the income statement over the period of the borrowingsusing the effective interest method. Financial risk factors The Group is exposed to interest rate risk, liquidity risk, currency risk andcapital risk management arising from the financial instruments it holds. Therisk management policies employed by the Group to manage these risks arediscussed below: Interest rate risk Interest rate risk is the risk that the value of financial instruments willfluctuate due to changes in market interest rates. The Group's income andoperating cash flows are substantially independent of changes in market interestrates as the Group has no significant interest-bearing assets. The Group isexposed to interest rate risk in relation to its non-current borrowings.Borrowings issued at variable rates expose the Group to cash flow interest raterisk. Borrowings issued at fixed rates expose the Group to fair value interestrate risk. The Group's management monitors the interest rate fluctuations on acontinuous basis and acts accordingly. At the reporting date the interest rate profile of interest- bearing financialinstruments was: Fixed rate instruments 2007 2006 GBP'000 GBP'000Financial liabilities 2,518 - 3. Financial risk management Liquidity risk Liquidity risk is the risk that arises when the maturity of assets andliabilities does not match. An unmatched position potentially enhancesprofitability, but can also increase the risk of losses. The Group hasprocedures with the object of minimising such losses such as maintainingsufficient cash and other highly liquid current assets and by having availablean adequate amount of committed credit facilities. The following tables detail the Group's remaining contractual maturity for itsfinancial liabilities. The tables have been drawn up based on the undiscountedcash flows of financial liabilities based on the earliest date on which theGroup can be required to pay. The table includes both interest and principalcash flows. 31 December 2007 Carrying Contractual 3 months 3-12 1-2 2-5 More than amounts cash flows or less months years years 5 years GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000Other loans 2,518 2,703 - 302 1,813 403 -Trade and other payables 591 591 591 - - - - 3,109 3,294 591 302 1,813 403 - 31 December 2006 Carrying Contractual 3 months 3 - 12 1 - 2 years 2 - 5 More than amounts cash flows or less months years 5 years GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000Other loans - - - - - - -Trade and other 324 324 324 - - - - payables 324 324 324 - - - - Currency risk Currency risk is the risk that the value of financial instruments will fluctuatedue to changes in foreign exchange rates. Currency risk arises when futurecommercial transactions and recognised assets and liabilities are denominated ina currency that is not the Group's measurement currency. The Group is exposed toforeign exchange risk arising from various currency exposures primarily withrespect to the US Dollar and the Euro. The Group's management monitors theexchange rate fluctuations on a continuous basis and acts accordingly. The carrying amounts of the Group's foreign currency denominated monetary assetsand monetary liabilities at the reporting date are as follows: Liabilities Assets 2007 2006 2007 2006 GBP'000 GBP'000 GBP'000 GBP'000United States Dollar 2,518 - - - Sensitivity analysis A 10% strengthening of the British Pounds against the following currencies at 31December 2007 would have increased (decreased) equity and profit or loss by theamounts shown below. This analysis assumes that all other variables, inparticular interest rates, remain constant. For a 10% weakening of the BritishPounds against the relevant currency, there would be an equal and oppositeimpact on the profit and other equity. Equity Profit or Loss 2007 2006 2007 2006 GBP'000 GBP'000 GBP'000 GBP'000United States Dollar (252) - (252) - Capital risk management The Group manages its capital to ensure that it will be able to continue as agoing concern while maximizing the return to shareholders through theoptimization of the debt and equity balance. The Group's overall strategyremains unchanged from last year. Fair value estimation The fair values of the Group's financial assets and liabilities approximatetheir carrying amounts at the balance sheet date. 4. Operating loss 2007 2006 GBP'000 GBP'000Operating loss is stated after charging the following items:Provision for impairment of goodwill (Note 11) 71 -Provision for impairment of evaluation costs of Rio Tinto Mine 3,894 -Depreciation of property, plant and equipment (Note 10) 37 17Share-based employee benefits 524 186Auditors' remuneration 33 33 5. Business and geographical segments Business segments The Group has only one distinct business segment, being that of mineralexploration. Geographical segments The Group's exploration activities are located in Cyprus, Georgia, Greece, andSlovakia and its administration and management is based in Cyprus. Discontinued Operations Cyprus Spain Slovakia Georgia Europe Turkey Bulgaria Consol. Total GBP GBP GBP GBP GBP GBP GBP GBP GBP '000 '000 '000 '000 '000 '000 '000 '000 '0002007Operating (2,244 (3,896) (1,478) (189) (26) (71) (7,904) lossFinancial 2 53 87 - 9 151 incomeFinancial (58) (1) (50) (109) costsLoss for (6,194) (3,843) (1,392) (239) (17) (71) (7,862) the yearShare of Results (512) From associatesNet loss for the year (8,374) Total assets 10,355 1,917 125 911 44 (8,374) 4,978Total liabilities (4,732) (1,860) (2,219) (1,940) (130) (7,772) (3,109)Depreciation of fixed 35 2 37 assets 2006Operating (1,698) (369) (574) (92) (166) (42) (2,941) lossFinancial 7 1 8 incomeFinancial (21) (21) costsLoss for the (1,712) (369) (573) (92) (166) (42) (2,954) yearShare of (31) results from associatesGain on disposal of 328 subsidiariesNet loss for the year (2,657)Total assets 5,444 19 799 41 (3,644) 2,659Total liabilities (1,385) (648) (1,522) (109) (3,370) (324)Depreciation of fixed assets 15 2 17 6. Finance income 2007 2006 GBP'000 GBP'000Interest income 2 8Net foreign exchange transaction gains 60 - 62 8 7. Finance costsBank interest 5Sundry finance expenses 14 11Net foreign exchange transaction loss - 10 19 21 8. TaxCurrent tax:Defence contribution - current year - 1Total charge for the period - 1 The tax on the Group's results before tax differs from the theoretical amountthat would arise using the applicable tax rates as follows: 2007 2006 GBP'000 GBP'000Loss before tax (8,374) (2,448)Tax calculated at the applicable tax rates (983) (419)Tax effect of expenses not deductible for tax purposes 42 48Tax effect of tax loss for the year 898 275Tax effect of allowances and income not subject to tax 46 (1)Tax effect of tax loss deferred over the next five years 28 98Tax effect of utilization of tax losses brought forward (31) - that are deferred over the next five yearsDefence contribution current year - 1Tax charge - 1 Due to tax losses sustained in the period, no tax liability arises on the Group.Under current legislation, tax losses may be carried forward and be set offagainst taxable income of the following years. As at 31 December 2007, thebalance of tax losses which is available for offset against future taxableprofits amounts to GBP6,723,657 (2006: GBP3,312,129). Cyprus Georgia Greece Slovakia TotalTax year GBP GBP GBP GBP GBPLosses b/f 845,109 - - - 845,1092005 1,474,814 - - 263,535 1,738,3492006 172,010 176,101 11,308 369,252 728,6712007 1,899,575 96,935 22,915 1,392,103 3,411,528 4,391,508 273,036 34,223 2,024,890 6,723,657 Cyprus The corporation tax rate is 10%. Under certain conditions interest may besubject to defence contribution at the rate of 10%. In such cases 50% of thesame interest will be exempt from corporation tax, thus having an effective taxrate burden of approximately 15%. In certain cases, dividends received fromabroad may be subject to defence contribution at the rate of 15%. Caucasus The corporation tax rate is 20%. Due to no profit and no losses sustained in theperiod, no tax liability arises in the Company. Under current legislation, taxlosses may be carried forward and be set off against taxable income in thefollowing five years. Georgia The corporation tax rate is 20%. Due to tax losses sustained in the period, notax liability arises in the Company. Under current legislation, tax losses maybe carried forward and be set off against taxable income in the following fiveyears. Per local tax legislation, geological and associated administrativeexpenses are deferred for tax purposes over a period of 5 years. Therefore,there is a deferred expense of GBP599,114 (USD1,196,027) available foroffsetting in future periods. Greece The corporation tax rate is 29%. Due to tax losses sustained in the period, notax liability arises in the Company. Under current legislation, tax losses maybe carried forward and be set off against taxable income in the following fiveyears. Slovakia The corporation tax rate is 19%. Due to tax losses sustained in the period, notax liability arises in the Company. Under current legislation, tax losses maybe carried forward and be set off against taxable income in the following years. 9. Loss per share The calculation of the basic and diluted earnings per share attributable to theordinary equity holders of the parent is based on the following data: 2007 2006 GBP'000 GBP'000Net loss attributable to equity shareholders from continuing operations (8,374) (2,449)Net loss attributable to equity shareholders from continuing and (8,374) (2,657)discontinued operations Number of ordinary shares for the purposes of basic earnings per share 122,474 92,727 Earnings per share:From continuing operationsBasic and fully diluted losses per share (pence) (6.84) (2.64) From continuing and discontinued operationsBasic losses and fully diluted per share (pence) (6.84) (2.87) Plant and Motor Furniture, Total10. Property, plant and equipment machinery vehicles Fixtures and office2007 equipmentThe Group GBP'000 GBP'000 GBP'000 GBP'000CostAt 1 January 2007 1 47 43 91Additions 154 35 - 189At 31 December 2007 155 82 43 280DepreciationAt 1 January 2007 1 20 18 39Charge for the year 8 13 16 37At 31 December 2007 9 33 34 76Net book amount at 31 December 2007 146 49 9 2042006CostAt 1 January 2006 1 31 31 63Additions - 16 12 28At 31 December 2006 1 47 43 91DepreciationAt 1 January 2006 1 13 8 22Charge for the year - 7 10 17At 31 December 2006 1 20 18 39Net book amount at 31 December 2006 - 27 25 52 2007The Company GBP'000 GBP'000 GBP'000 GBP'000Cost - 33 31 64 At 1 January 2007Additions 154 35 - 189At 31 December 2007 154 68 31 253DepreciationAt 1 January 2007 - 11 10 21Charge for the year 8 12 15 35At 31 December 2007 8 23 25 56Net book amount at 31 December 2007 146 45 6 1972006Cost - 22 24 46 At 1 January 2006Additions - 11 7 18At 31 December 2006 - 33 31 64DepreciationAt 1 January 2006 - 5 3 8Charge for the year - 6 7 13At 31 December 2006 - 11 10 21Net book amount at 31 December 2006 - 22 21 43 The above fixed assets are located in Cyprus and Georgia. 11. Intangible assetsThe Group Evaluation costs Goodwill Total2007 of Rio Tinto MineCost GBP'000 GBP'000 GBP'000On 1 January 2007 - 585 585Additions 3,894 71 3,965At 31 December 2007 3,894 656 4,550Provision for impairmentOn 1 January 2007 - 585 585Provision for the year (Note 4) 3,894 71 3,965At 31 December 2007 3,894 656 4,550Closing net book value - - -2006 CostOn 1 January 2006 - 585 585Additions - 71 71At 31 December 2006 - 656 656Provision for impairmentOn 1 January 2006 - 585 585Provision for the year (Note 4) - - -At 31 December 2006 - 585 656Closing net book value - 71 71 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 EMEDTartessus S.L. The evaluation costs of Rio Tinto Mine consist of all expenditure incurred up tothe balance sheet date necessary to evaluate the project and include theincorporation costs of the Spanish associate EMED Tartessus S.L. The proposal remains subject to the following conditions: • Regulatory approvals by the Junta de Andalucia Government,support of the local community and approvals by the relevant statutoryauthorities in respect of performance bonds; • Settlement satisfactory to EMED Mining of the Rio TintoMine-vendor's liabilities, liens and contractual arrangements with a number ofthird parties including landholders. These various obligations arose overseveral years as a result of the funding of ongoing care and maintenance,bankruptcy and litigation amongst some parties; • Completion of technical due diligence for: i. planning the restart of themine, processing plant and product marketing operations, and ii. planning for a fast-trackapproach to site rehabilitation where reasonable to be undertaken concurrentlywith ongoing long-term production; and iii. completion of all due diligenceto EMED Mining's satisfaction including environmental considerations andinfrastructure needs. EMED Tartessus SL has submitted its proposals for the restart of production tothe Government. A shareholder meeting will be called at the appropriate time toseek approval to proceed if all conditions precedent have been met to thesatisfaction of the Government and the Company. Should the Company not proceed with Rio Tinto Mine it is obliged to pay for careand maintenance at the site for a period of 6 months from the date ofnotification of withdrawal. This gives rise to a contingent liability of €1.5million. Should another party re-open Rio Tinto Mine, the care and maintenanceand evaluation expenditure incurred by EMED Mining may be recoverable in partunder certain circumstances. 12. Investment in subsidiaries 2007 2006The Company GBP'000 GBP'000Opening amount at cost 645 648Additions/(Disposals) 10 (3)Closing amount at cost 655 645 Date of Country of Effective acquisition/ incorporation proportionCompanies names incorporation of shares heldEastern 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/ Georgia 100% 11 Feb 2006Eastern 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% In 2007, the Company incorporated three new fully owned subsidiaries. SlovenskeNerasty Spol S.R.O and Slovenske Kovy S.R.O. were incorporated in Slovakia, andEMED Mining Spain S.L. was incorporated in Spain. 13. Investment in associates 2007 2006The Group GBP'000 GBP'000At 1 January 793 -Additions at cost - 430Share of results (512) (31)Share of equity adjustment 233 394Closing amount based on equity accounting 514 793The Company 430 - At 1 JanuaryAdditions - 430Closing amount at cost 430 430 Company name Date of Country of Effective incorporation incorporation proportion of shares heldKefi Minerals Public Plc 24 October 2006 United Kingdom 34%EMED Tartessus S.L. 12 April 2007 Spain 51% The shares in EMED Tartessus S.L. are 'Privileged Shares' and will be returnedto the vendor should the Company decide not to proceed with the Rio Tinto Mineproject. 2007 2006Amounts relating to associates: GBP'000 GBP'000Total assets 592 1,914Total liabilities (119) (568) 473 1,346 Loss for the period (690) (201) 2007 200614. Inventories GBP'000 GBP'000The Group and the Company Rig consumables 78 - 15. Trade and other receivablesThe Group Receivables from associates 57 291Other receivables - 157Deposits and prepayments 719 9VAT 136 79 912 536 The CompanyReceivables from own subsidiaries 6,928 2,654Receivables from associates 57 291Other receivables - 157Deposits and prepayments 719 8VAT 116 59 7,820 3,169 16. Cash and cash equivalentsThe GroupCash at bank and in hand 3,270 1,207The CompanyCash at bank and in hand 1,153 1,135 17. Share capital Number Share Share of shares Capital premium TotalAuthorised '000 GBP'000 GBP'000 GBP'000Ordinary shares of GBP0.0025 each 200,000 500 - 500 Issued and fully paid1 January 2006 56,556 141 2,886 3,027Issued 7 March 2006 at GBP 0.125 12,000 30 1,470 1,500Issued 7 March 2006 at GBP 0.125 1,889 5 232 237 for database purchaseIssued 28 June 2006 at GBP 0.125 1,152 3 141 144 for database purchaseIssued 2 November 2006 at GBP 0.085 20,850 52 1,720 1,772Issued 6 November 2006 at GBP 0.0975 for purchase of license option 280 1 26 27Share issue costs - - (214) (214)At 31 December 2006/1 January 2007 92,727 232 6,261 6,493Issued 10 May 2007 at GBP0.12 33,333 83 3,917 4,000Issued 26 June 2007 at GBP0.1175 250 1 29 30 for purchase of servicesIssued 21 September 2007 at GBP0.17 20,588 51 3,449 3,450Issued 21 September 2007 at GBP0.1699 1,030 3 172 175 under SEDAIssued 21 November 2007 at GBP0.08 375 1 29 30 upon exercise of share optionsIssued 3 December 2007 at GBP0.08 167 - 13 13 upon exercise of share optionsIssued 18 December 2007 at GBP0.2164 1,155 3 247 250 under SEDAShare issue costs - - (814) (814)At 31 December 2007 149,625 374 13,303 13,677 Authorised capital Under its Memorandum the Company fixed its share capital at 1,000 ordinaryshares of nominal value of CY£1 each. On 20 September 2006 the Company passed the following special resolution: That the authorized share capital of the Company be increased from GBP250,000divided into 100,000,000 shares of GBP 0.0025 each, by GBP250,000 by thecreation of 100,000,000 new ordinary shares of GBP0.0025 each, resulting toGBP500,000 divided into 200,000,000 shares of GBP0.0025 each. Issued capital On 10 May 2007 333,333,334 shares at GBP 0.0025 were issued at a price of GBP0.1175. Upon the issue an amount of GBP3,916,667 was credited to the Company'sshare premium reserve. On 26 June 2007 250,000 shares at GBP 0.0025 were issued at a price of GBP0.1175. Upon the issue an amount of GBP29,375 was credited to the Company'sshare premium reserve. On 21 September 2007 20,588,000 shares at GBP 0.0025 were issued at a price ofGBP 0.17. Upon the issue an amount of GBP3,448,490 was credited to the Company'sshare premium reserve. On 21 September 2007 1,030,109 shares at GBP 0.0025 were issued at a price ofGBP 0.1699. Upon the issue an amount of GBP172,425 was credited to the Company'sshare premium reserve. On 21 November 2007, 375,000 shares at GBP 0.0025 were issued, upon exercise ofshare options, at the exercise price of GBP 0.08. Upon the issue an amount ofGBP29,063 was credited to the Company's share premium reserve. On 3 December 2007, 166,666 shares at GBP 0.0025 were issued, upon exercise ofshare options, at the exercise price of GBP 0.08. Upon the issue an amount ofGBP12,917 was credited to the Company's share premium reserve. On 18 December 2007 1,255,268 shares at GBP 0.0025 were issued at a price of GBP0.2164. Upon the issue an amount of GBP247,112 was credited to the Company'sshare premium reserve. Standby Equity Distribution Agreement On the 22 June 2007, the Company entered into a £10.0m Standby EquityDistribution Agreement ("SEDA")with Yorkville Advisors, LLC, as the InvestmentAdvisor 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 intranches of GBP250,000 as and when it deems appropriate and in accordance withrestrictions 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 1,030,109New Ordinary Shares at 16.99p per share and GBP250,000 from the issuance of1,155,268 New Ordinary Shares at 21.64p per share. 18. Share option plan Details of share options outstanding as at 31 December 2007: Number ofGrant date Expiry date Exercise price share options GBP 000's9 May 2005 9 May 2011 0.080 10,83911 August 2005 11 August 2011 0.100 70028 April 2006 28 April 2012 0.135 3,53028 June 2006 28 June 2012 0.135 1508 September 2006 8 September 2012 0.090 1,0008 September 2006 8 September 2012 0.110 1,00025 January 2007 25 January 2013 0.120 1,50026 February 2007 26 February 2013 0.135 3,85011 May 2007 11 May 2012 0.120 1,00011 May 2007 11 May 2013 0.150 2,50026 June 2007 26 June 2013 0.187 50026 June 2007 26 June 2013 0.170 62523 July 2007 23 July 2013 0.200 1,00021 September 2007 21 September 2012 0.170 91118 December 2007 18 December 2011 0.500 1,00031 December 2007 31 December 2013 0.220 4,865Total 34,970 Number of shares 000'sOutstanding options at 31 December 2007: 18,261- granted 17,751- forfeited (500) - exercised (542) 34,970 The Company has issued share options to directors, employees and suppliers ofthe Group. All options, except those noted below, expire six years after grantdate and are exercisable at the exercise price in whole or in part no more thanone third within one year from the grant date, two thirds after two years fromthe grant date and the balance after three years from the grant date. On 11 May 2007, 1 million options were issued to Fox Davies Capital which expirefive years after the grant date, and are exercisable at any time within thatperiod. On 11 May 2007, 2.5 million options were issued to the Managing Director. Theseoptions vest only if the Company exercises its option over Rio Tinto Mine. Theoptions expire six years after the date of issue and can be exercised at anytime during this period once they have vested. On 26 June 2007, 1.25 million options were issued that expire six years afterthe grant date, and are exercisable at any time within that period. On 23 July 2007, 1 million options were issued to the Finance Director. Theseoptions vest only if the Company exercises its option over Rio Tinto Mine. Theoptions expire six years after the date of issue and can be exercised at anytime during this period once they have vested. On 21 September 2007, 0.911 million options were issued that expire five yearsafter 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 LPwhich expire four years after the grant date, and are exercisable at any timewithin that period. The option agreements contain provisions adjusting the exercise price in certaincircumstances including the allotment of fully paid Ordinary Shares by way of acapitalisation of the Company's reserves, a sub division or consolidation of theOrdinary Shares, a reduction of share capital and offers or invitations (whetherby way of rights issue or otherwise) to the holders of Ordinary Shares. The estimated fair values of the options were calculated using the Black Scholesoption pricing model. The inputs into the model and the results are as follows: Weighted Weighted Expected Expected Risk free Expected Discount Estimated average average volatility life rate dividend factor fair value share price exercise (years) yield price31 Dec. 2007 22.00p 22.00p 65.96% 6 4.27% Nil 30% 9.76p18 Dec. 2007 19.00p 50.00p 65.42% 4 4.27% Nil 30% 3.85p21 Sept. 2007 17.00p 17.00p 61.93% 5 5.00% Nil 30% 6.47p23 Jul. 2007 14.00p 20.00p 57.88% 6 6.35% Nil 30% 5.13p26 Jun. 2007 13.50p 18.66p 57.88% 6 6.32% Nil 30% 5.09p26 Jun. 2007 13.50p 17.00p 57.88% 6 6.32% Nil 30% 5.30p11 May 2007 13.25p 12.00p 57.88% 5 6.07% Nil 30% 5.43p11 May 2007 13.25p 15.00p 57.88% 6 6.07% Nil 30% 5.37p26 Feb. 2007 11.83p 13.50p 60% 6 5.85% Nil 30% 4.19p25 Jan. 2007 11.10p 12.00p 57.88% 6 5.97% Nil 30% 4.56p8 Sept. 2006 9.00p 11.00p 46% 6 4.90% Nil 20% 5.51p8 Sept. 2006 9.00p 9.00p 46% 6 4.90% Nil 20% 5.86p28 Jun. 2006 9.50p 13.50p 37% 6 4.80% Nil 20% 3.30p28 Apr. 2006 9.50p 13.50p 37% 6 4.70% Nil 20% 3.25p11 Aug. 2005 8.88p 10.00p 20% 6 4.40% Nil 20% 3.18p9 May 2005 8.75p 8.00p 15% 6 4.40% Nil 20% 2.50p Expected volatility was determined by calculating the historical volatility ofthe Company's share price over the period since the Company was admitted totrading on AIM. 19. Trade and other payables 2007 2006The Group and the Company GBP'000 GBP'000Trade payables 568 307Accruals 23 17 591 324 20. BorrowingsCurrent borrowingsOther loans 302 - Non-current borrowingsOther loans 2,216 - Maturity of non-current borrowingsBetween one to two years 302 -Between two and five years 2,216 -After five years - - 2,216 - On 18 December 2007, the Company entered into a loan facility with YA GlobalInvestments ('YA') The cash advance available under the facility was US$ 4.7 million (after feesand costs of US$ 300,000) at an interest rate of 8.0% per annum and this wasdrawn down on 20 December 2007. There are no repayments until September 2009after which the payments can be made in cash or shares at EMED Mining's electionover 18 monthly installments. If an installment is made by way of shares, the repayment share price is thelower of 25.51p (the "Conversion Price") being 120 per cent of the average ofthe volume weighted average prices for the 5 consecutive trading daysimmediately prior to the date the loan was drawn down or 95% of the lower dailyweighted average market price over two alternative 5 day periods prior to therepayment. The Company can elect to repay part or all of any advance early in cash subjectto an early repayment fee of 8.0% of the amount so paid. YA can, subject tocertain restrictions, elect to convert the debt into shares at any time at theConversion Price of 25.51p. In this event, the Company can either issue theshares or pay to YA the cash equivalent of the Conversion Price, plus the amountby which the weighted average market price over a 5 day period at the timeexceeds the Conversion Price. The Company is obliged, if requested by YA, to apply 20% of any amount over US$15million raised in the future to reduce any loan amount outstanding. Inaddition, drawdowns of the SEDA facility (see Note 17) are restricted to afurther £1 million between the date of the loan drawdown and the date the firstrepayment is due. Thereafter, the SEDA is unavailable until any loan advanceunder this loan facility is repaid. 21. Acquisition of subsidiaries 2007 In 2007, the Company incorporated three new fully owned subsidiaries. SlovenskeNerasty Spol S.R.O and Slovenske Kovy S.R.O. were incorporated in Slovakia, andEMED Mining Spain S.L. was incorporated in Spain. The share capital for the incorporation of the three subsidiaries was paid incash as follows: GBP'000Slovenske Nerasty Spol S.R.O 4Slovenske Kovy S.R.O. 4EMED Mining Spain S.L. 2 10 2006 On 11 February 2006, the wholly owned subsidiary Eastern Mediterranean Resources(Caucasus) Ltd acquired an additional 20% of the issued share capital ofGeorgian Mineral Development Company Ltd incorporated in Georgia, reaching to100% shareholding. The principal activity of the acquired company is theexploration for mineral deposits, evaluation thereof and marketing theresources. The consideration for the acquisition was 1,000 shares with a valueof USD50,000 (£27,459). Details of net assets acquired and goodwill are asfollows: GBP'000Shares in the capital of the purchaser 1 Total Purchase consideration 27Fair Value of liabilities acquired 44Goodwill on acquisition 71 The fair value of the assets and liabilities arising from the acquisition are asfollows: GBP'000Bank and cash balances 3Equipment -Related company balances (223)Total fair values (220) Fair value of liabilities acquired (20%) (44)Goodwill 71Purchase price 27Consideration in shares 27 22. Discontinued operations 2007 There were not any discontinued operations during 2007. 2006 During the 2006, the Group subsidiaries in Turkey and Bulgaria were consideredto be best served by the establishment of a separately listed associate company.Accordingly, EMED Mining formed Kefi Minerals Plc (Kefi) on 24 October 2006 as aUK-registered holding company for the purposes of holding its interests inTurkey and Bulgaria. On 8 November 2006, EMED Mining entered into an agreement to dispose of EasternMediterranean Resources (Bulgaria) EOOD and Dogu Akdeniz Mineralli Ltd, and onthe same date control passed to Kefi Minerals Plc. Consideration was in the formof shares in Kefi. This issue of shares was also partly in satisfaction ofindebtedness due to EMED Mining. In December 2006, Kefi was admitted to AIM. EMED Mining retained a 34%shareholding at the year end. The consolidated net assets of Bulgaria and Turkey at the date of disposal wereas follows: 8 November 2006 GBP'000Cash at bank and in hand (6)Payable to EMED Mining 370Total fair values 364Consideration in shares 300Profit before assignment of debt 664Assignment of debt (336)Gain on disposal of subsidiaries 328 The effect of discontinued operations on segment results is disclosed in Note 5. 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 wasas follows: 2007 2006 GBP'000 GBP'000Directors' fees 349 278Share-based benefits to directors 264 93Other key management personnel fees 286 347Share-based benefits to other key management personnel 93 33 992 751 Share-based benefits The directors and key management personnel have been granted options as set outin Note 18. 23. Related party transactions (continued) 23.2 Purchases geological survey data 2007 2006 GBP'000 GBP'000Data acquisition - 117 In 2006, the Company purchased data from a key management officer. Thetransaction was made on commercial terms and conditions and it was settled inshares. 24. Contingent liabilities In relation to Rio Tinto Mine, should the Company not proceed with its option toacquire an interest, it is obligated to pay for care and maintenance at the sitefor a period of 6 months from the date of the notification of withdrawal. Thisgives rise to a contingent liability of €1.5 million. As part of the acquisition cost of a 95% share in Eastern Mediterranean Minerals(Cyprus) Limited, an additional contingent consideration of GBP600,000 ispayable by the Company one month after the date on which Eastern MediterraneanMinerals (Cyprus) Limited first receives revenue of GBP1,000,000 from or inrespect of specific exploration tenements. 25. Capital commitments The Group has also undertaken a capital commitment, for exploration in Slovakiaamounting to SKK29,300,000 (approximately GBP 593,000) over 2006 to 2009. TheGroup's exploration costs in 2006-7 and the budget for the following yearsexceed the amount of this capital commitment. 26. Post balance sheet events There were no material post balance sheet events, which have a bearing on theunderstanding of the financial statements. This information is provided by RNS The company news service from the London Stock Exchange