Eurasia Mining Regulatory News (EUA)

27 Sep 2007 07:01

Eurasia Mining PLC27 September 2007 Eurasia Mining Plc. Condensed consolidated interim financial statements for the six months ending 30 June 2007 Contents Chairman's Statement Highlights: Condensed consolidated interim income statement Condensed consolidated balance sheet Condensed consolidated interim statement of changes in equity Condensed consolidated interim cash flow statement Notes to the condensed consolidated financial statements 1. General information 2. Basis of preparation 3. Significant accounting policies 4. Business and geographical segments 5. Additions and disposals of property, plant and equipment 6. Additions and disposals of intangible assets 7. Investments in equity accounted investees 8. Reserves 9. Borrowings Company information Chairman's Statement Highlights: Losses trimmed as company advances with: • Two new platinum discoveries on Kola Peninsula; • Full exploration funding from Anglo Platinum; • Urals drilling prepares way for bankable feasibility study; • New drill rig started work to trace discoveries at Volchetundra. The first six months of 2007 have seen the company announce two new discoveriesof platinum and Palladium in Kola. In parallel, the company is advancing toplatinum production in the Urals. On the Kola Peninsula in northwest Russia Eurasia has been exploring in jointventure with Anglo Platinum, who are earning an initial 40% interest in threeplatinum group metals (PGM) exploration licences in the area. This year thejoint venture expects to spend over $3 million in Kola, funded in full by AngloPlatinum, as part of a $10 million earn-in. The two discoveries announced inearly 2007 are based on the drilling undertaken during the 2006 season for whichassays were received this year. Drilling on these areas has continued and weanticipate making further announcements as assays are received from this newwork. At the Monchetundra discovery, drilling has continued tracing the mineralizationboth along strike and at greater depth. The latest results show very encouragingplatinum plus palladium values between 1 and 2.9 gram per tonne (g/t) oversubstantial widths. These results were obtained from a zone where detaileddrilling is underway. The intersections represent at least two separate PGM bearing horizons that havebeen traced so far for several hundred metres and remain open both at depth andalong strike. In view of the broad widths, apparent continuity and low sulphidecontent Eurasia is targeting an open pit scenario with concentration byflotation to produce a marketable high grade concentrate. On a second Kola licence area at Volchetundra, first drill results from a newtarget area discovered PGM mineralization in three zones in one drillhole: 44.6metres at 1.7 g/t of platinum and palladium; and 18.5 metres at 1.9 g/t ofplatinum and palladium; and 1 metre at 11 g/t of platinum and palladium.Palladium/platinum ratios vary from 0.3 to 3.1 to 1. At the time of writing wehave just secured a new drill rig which has started work to trace thesediscoveries. On the third licence area at West Imandra, drilling of a new target area isplanned for later in 2007. In the Urals at West Kytlim, drilling was completed in one of the plannedproduction areas. Eurasia expects to complete a reserve report in October whichcan be lodged with the relevant authorities, a necessary step once theconversion of the exploration licence into a mining permit is required. Theobjective is to complete all the permitting required by the authorities to allowmining to commence in mid 2008. Feasibility work continues and upon the completion of a bankable study the jointventure will examine how best to implement the project. Issues currently underconsideration include the use of mining plant owned by a local partner,Production Artel Yuzhno-Zaozersky Priisk, investment in a new washing plant andproject finance options. Bulk sampling is underway and will be completed shortlyas part of this assessment work. Work continues on the Company's planned gold projects but there is as yet nosubstantive information to report. We are very pleased with the progress we are making at present. The discovery ofnew mineralization in two areas in Kola is a remarkably fast and unusually highsuccess rate from our exploration efforts. In parallel, the development work atWest Kytlim holds out the prospect of the company's first platinum productionbeing achieved in 2008. We look forward to reporting our plans for thisimportant milestone in the coming months. Dr. Michael Martineau Chairman Condensed consolidated interim income statementFor the six months ended 30 June 2007 Note 6 months to 6 months to 30 June 2007 30 June 2006 £ £ Revenue - -Impairment of assets 6 - (29,129)Gross loss - (29,129) Finance costs 9 (38,683) (39,169)Investment revenue 14,931 4,328Other losses (25,860) (50,118)Share of losses of equity accounted investees 7 (6,339) (83,530)Administrative costs (438,878) (356,699) Loss before tax (494,829) (554,317)Income tax expense - - Loss for the period (494,829) (554,317) Attributable to:Equity holders of the parent (486,058) (541,624)Minority interest (8,771) (12,693) Loss for the period (494,829) (554,317) Loss per share: Basic loss (pence per share) (0.40) (0.49)Diluted loss (pence per share) (0.34) (0.44) Condensed consolidated balance sheetAs at 30 June 2007 Note 30 June 31 December 2006 2007 £ £ASSETSNon-current assetsProperty, plant and equipment 5 98,231 33,601Intangible assets 6 847,702 859,613Investments in equity accounted investees 7 1,208,326 1,220,054Assets available for sale 127 127Total non-current assets 2,156,386 2,113,395Current assetsTrade and other receivables 250,189 217,685Cash and bank balances 1,127,164 1,130,981Total current assets 1,377,353 1,348,666 Total assets 3,531,739 3,462,061EQUITYIssued capital 7,042,805 7,042,805Share premium 7,020,549 7,020,549Reserves 8 3,724,188 3,644,802Accumulated losses (15,733,643) (15,247,585)Equity attributable to equity holders 2,053,899 2,460,571 of the parentMinority interest (62,379) (54,934) Total equity 1,991,520 2,405,637LIABILITIESNon-current liabilitiesLong-term borrowings 9 80,077 499,998Total non-current liabilities 80,077 499,998Current liabilitiesTrade and other payables 1,007,642 556,426Short-term borrowings 9 452,500 -Total current liabilities 1,460,142 556,426 Total liabilities 1,540,219 1,056,424 Total equity and liability 3,531,739 3,462,061 The financial statements were approved by the Board on 26 September 2007 andsigned on its behalf by: C. SchaffalitzkyDirector Condensed consolidated interim statement of changes in equity Note Share Share Capital Foreign Accumulated Attributable Minority Total capital premium redemption currency losses to equity interest and other translation holders of reserves reserve the parent £ £ £ £ £ £ £ £ Balance at 5,188,086 7,034,374 3,539,906 37,675 (14,152,462) 1,647,579 (33,700) 1,613,87931 December 2005 Changes in equity for the first half of 2006 Exchange differences on - - - (734) - (734) 2,386 1,652translation offoreign operations Loss for the period - - - - (541,624) (541,624) (12,693) (554,317) Total recognised income andexpense for the period - - - (734) (541,624) (542,358) (10,307) (552,665) Issue of share capital 967,500 - - - - 967,500 - 967,500 Equity component 9 - - 49,167 - - 49,167 - 49,167of convertible loan notes 6,155,586 7,034,374 3,589,073 36,941 (14,694,086) 2,121,888 (44,007) 2,077,881 Balance at 30 June 2006 Condensed consolidated interim statement of changes in equity (continued) Note Share Share Capital Foreign Accumulated Attributable Minority Total capital premium redemption currency losses to equity interest and other translation holders of reserves reserve the parent £ £ £ £ £ £ £ £Balance at 31 7,042,805 7,020,549 3,589,073 55,729 (15,247,585) 2,460,571 (54,934) 2,405,637December 2006 Changes in equity for the first half of 2007 Exchange differences on - - - (838) - (838) 1,326 488translation of foreign operations Loss for the period - - - - (486,058) (486,058) (8,771) (494,826) Total recognised income andexpense for the period - - - (838) (486,058) (486,896) (7,445) (494,341) Recognition of share-based - - 15,075 - - 15,075 - 15,075payments Gain on property 5 - - 65,149 - - 65,149 - 65,149revaluation Balance at 30 June 2007 7,042,805 7,020,549 3,669,297 54,891 (15,733,643) 2,053,899 (62,379) 1,991,520 Condensed consolidated interim cash flow statement For the six months ended 30 June 2007 Note 6 months to 6 months to 30 June 2007 30 June 2006 £ £Cash flows from operating activities Loss for the period (494,829) (554,317)Adjustments for: Depreciation of non-current assets 5 1,353 3,008 Impairment of non-current assets 6 - 29,129 Share of loss of joint venture 7 4,054 83,530 Share of loss of associates 7 2,285 - Net foreign exchange loss 25,860 50,118 Investment income (14,931) (4,328) Finance costs 38,683 39,169 Share based payments 15,075 - Increase in trade and other receivables (32,504) (25,053) Increase in trade payables 471,991 100,006Cash inflow/(outflow) from operations 17,037 (278,738) Interest paid (13,751) -Net cash from operating activities 3,286 (278,738) Cash flows from investing activitiesContributed to joint venture - (1,543,328)Purchase of property, plant and equipment 5 (2,148) (1,134)Payments for intangible assets 6 (7,307) (17,761)Interest received 14,931 4,328Net cash generated/(used) in investing activities 5,476 (1,558,095) Cash flows from financing activitiesProceeds from short term loan - 1,525,330Proceeds from issue of share capital - 200,000Net proceeds from issue of convertible loan notes 9 - 655,000Net cash proceeds from financing activities - 2,380,330 Effects of exchange rate changes on the balance of cash (12,579) (2,188)held in foreign currencies Net increase in cash and cash equivalents 3,817 541,309Cash and cash equivalents at beginning of period 1,130,981 198,201 1,127,164 739,510 Cash and cash equivalents at end of period Notes to the condensed consolidated financial statements For the six months ended 30 June 2007 1. General information Eurasia Mining Plc (the "Company") is a public limited company incorporated anddomiciled in Great Britain with its registered office and principal place ofbusiness at Suite 139, Grosvenor Gardens House, 35-37 Grosvenor Gardens, LondonSW1W 0BS. The Company's shares are listed on the Alternative Investment Marketof the London stock Exchange. The principal activities of the Company and itssubsidiaries (the "Group") are related to the exploration for and development ofplatinum group metals, gold and other minerals in Russia. Eurasia Mining Plc's condensed consolidated interim financial statements arepresented in Pounds Sterling (£), which is also the functional currency of theparent company. The financial information set out in this condensed consolidated interimfinancial statements does not constitute statutory accounts as defined inSection 240 of the Companies Act 1985. The Group's statutory financialstatements for the year ended 31 December 2006, prepared under UK GAAP, havebeen filed with the Registrar of Companies. The auditor's report on thosefinancial statements was unqualified and did not contain a statement underSection 237(2) of the Companies Act 1985. 2. Basis of preparation Prior to 2007, the Group prepared its audited financial statements and unauditedinterim financial statements under UK Generally Accepted Accounting principles(UK GAAP). From 1 January 2007, the Group is required to prepare annualconsolidated financial statements in accordance with International FinancialReporting Standards (IFRS) as adopted by the European Union (EU) and implementedin the UK. As the 2007 annual financial statements will include comparatives for2006, the Group's date of transition to IFRS is 1 January 2006 with the 2006comparatives restated to IFRS. Thus these condensed consolidated interimfinancial statements for the period ended 30 June 2007 have been prepared byapplying the recognition and measurement provisions of IFRS and the accountingpolicies to be adopted for the annual accounts. These policies are summarised innote 3 below. An exercise to assess the full impact that the change to IFRS has had on theGroup's reported equity, reported losses and accounting policies, has beencompleted. In preparing its opening IFRS balance sheet, the Group has adjustedamounts reported previously in financial statements prepared in accordance withits previous basis of accounting (UK GAAP). Adoption of IFRS resulted in nochanges in the reported numbers from UK GAAP. These financial statements have been prepared under the historical costconvention, except for revaluation of certain properties and financialinstruments. The accounting policies have been applied consistently throughout the Group forthe purposes of preparation of these condensed consolidated interim financialstatements. 3. Significant accounting policies Basis of consolidation The consolidated financial statements incorporate the financial statements ofthe Company and entities controlled by the Company. Control is achieved wherethe Company has the power to govern the financial and operating policies of anentity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of are included in theconsolidated income statement from the effective date of acquisition or up tothe effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements ofsubsidiaries to bring their accounting policies into line with those used byother members of the Group. All intra-group transactions, balances, income and expenses are eliminated infull on consolidation. Minority interests in the net assets of consolidated subsidiaries are identifiedseparately from the Group's equity therein. Minority interests consist of theamount of those interests at the date of the original business combination andthe minority's share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority's interest in thesubsidiary's equity are allocated against the interests of the Group except tothe extent that the minority has a binding obligation and is able to make anadditional investment to cover the losses. Interests in joint ventures A joint venture is a contractual arrangement whereby the Group and other partiesundertake an economic activity that is subject to joint control that is when thestrategic financial and operating policy decisions relating to the activities ofthe joint venture require the unanimous consent of the parties sharing control. The Group reports its interests in jointly controlled entities using the equitymethod of accounting, except when the investment is classified as held for sale,in which case it is accounted for in accordance with IFRS 5 Non-current AssetsHeld for Sale and Discontinued Operations. Under the equity method, investments in joint venture are carried in theconsolidated balance sheet at cost as adjusted for post-acquisition changes inthe Group's share of the net assets of the joint venture, less any impairment inthe value of individual investments. Losses of a joint venture in excess of theGroup's interest in that joint venture are not recognised, unless the Group hasincurred legal or constructive obligations or made payments on behalf of thejoint venture. Any excess of the cost of acquisition over the Group's share of the net fairvalue of the identifiable assets, liabilities and contingent liabilities of thejoint venture recognised at the date of acquisition is recognised as goodwill. The goodwill, if any is included within the carrying amount of the investmentand is assessed annually for impairment as part of the investment. Any excess ofthe Group's share of the net fair value of the identifiable assets, liabilitiesand contingent liabilities over the cost of acquisition, after reassessment, isrecognised immediately in profit or loss. Unrealised gains on transactions between the Group and its joint venture areeliminated to the extent of the Group's interest in the joint venture.Unrealised losses are also eliminated unless the transaction provides evidenceof an impairment of the asset transferred. Interests in associates An associate is an entity over which the Group has significant influence andthat is neither a subsidiary nor an interest in a joint venture. Significantinfluence is the power to participate in the financial and operating policydecisions of the investee but is not control or joint control over thosepolicies. The results and assets and liabilities of associates are incorporated in thesefinancial statements using the equity method of accounting, except when theinvestment is classified as held for sale, in which case it is accounted for inaccordance with IFRS 5 Non-current Assets Held for Sale and DiscontinuedOperations. Under the equity method, investments in associates are carried inthe consolidated balance sheet at cost as adjusted for post-acquisition changesin the Group's share of the net assets of the associate, less any impairment inthe value of individual investments. Losses of an associate in excess of theGroup's interest in that associate are not recognised, unless the Group hasincurred legal or constructive obligations or made payments on behalf of theassociate. Any excess of the cost of acquisition over the Group's share of the net fairvalue of the identifiable assets, liabilities and contingent liabilities of theassociate recognised at the date of acquisition is recognised as goodwill. The goodwill, if any, is included within the carrying amount of the investmentand is assessed annually for impairment as part of the investment. Any excess ofthe Group's share of the net fair value of the identifiable assets, liabilitiesand contingent liabilities over the cost of acquisition, after reassessment, isrecognised immediately in profit or loss. Where a group entity transacts with an associate of the Group, profits andlosses are eliminated to the extent of the Group's interest in the relevantassociate. Foreign currencies Functional and presentation currency The individual financial statements of each group entity are presented in thecurrency of the primary economic environment in which the entity operates ("thefunctional currency"). The consolidated financial statements are presented inGBP, which is the functional and the presentation currency of the Company. Transaction and balances Foreign currency transactions are translated into the functional currency usingthe exchange rates prevailing at the dates of the transactions. Foreign exchangegains and losses resulting from the settlement of such transactions and from thetranslation at year-end exchange rates of monetary assets and liabilitiesdenominated in foreign currencies are recognised in the income statement Non-monetary items that are measured in terms of historical cost in a foreigncurrency are not retranslated. Group companies The results and financial position of all the group entities (none of which hasthe currency of a hyperinflationary economy) that have a functional currencydifferent from the presentation currency are translated into the presentationcurrency as follows: • assets and liabilities for each balance sheet presented are translated at theclosing rate at the date of that balance sheet; • income and expenses for each income statement are translated at averageexchange rates (unless this average is not a reasonable approximation of thecumulative effect of the rates prevailing on the transaction dates, in whichcase income and expenses are translated at the rate on the dates of thetransactions); and • all resulting exchange differences are recognised as a separate component ofequity. When a foreign operation is partially disposed of or sold, exchange differencesthat were recorded in equity are recognised in the income statement as part ofthe gain or loss on sale. Borrowing costs Borrowing costs directly attributable to the acquisition, construction orproduction of qualifying assets, which are assets that necessarily take asubstantial period of time to get ready for their intended use or sale, areadded to the cost of those assets, until such time as the assets aresubstantially ready for their intended use or sale. Investment income earned onthe temporary investment of specific borrowings pending their expenditure onqualifying assets is deducted from the borrowing costs eligible forcapitalisation. All other borrowing costs are recognised in profit or loss in the period inwhich they are incurred. Share-based payments Equity-settled share-based payments Equity-settled share-based payments to employees and others providing similarservices are measured at the fair value of the equity instrument at the grantdate. Fair value is measured by use of Black Scholes model. The expected lifeused in the model has been adjusted, based on management's best estimate, forthe effects of non-transferability, exercise restrictions and behaviouralconsiderations. The fair value determined at the grant date of the equity-settled share-basedpayments is expensed on a straight-line basis over the vesting period, based onthe Group's estimate of shares that will eventually vest. Equity-settled share-based payment transactions with other parties are measuredat the fair value of the goods and services received, except where the fairvalue cannot be estimated reliably, in which case they are measured at the fairvalue of the equity instruments granted, measured at the date the entity obtainsthe goods or the counterparty renders the service. All equity-settled share-based payments are ultimately recognised as an expensein the income statement with a corresponding credit to "other reserve". Upon exercise of share options the proceeds received net of attributabletransaction costs are credited to share capital, and where appropriate sharepremium. No adjustment is made to any expense recognised in prior periods ifshare options ultimately exercised are different to that estimated on vesting orif the share options vest but are not exercised. Cash-settled share-based payments For cash-settled share-based payments, a liability equal to the portion of thegoods or services received is recognised at the current fair value determined ateach balance sheet date. Taxation Income tax expense represents the sum of the tax currently payable and deferredtax. Current tax The tax payable is based on taxable profit for the year. Taxable profit differsfrom profit as reported in the income statement because it excludes items ofincome or expense that are taxable or deductible in other years and it furtherexcludes items that are never taxable or deductible. The Group's liability forcurrent tax is calculated using tax rates that have been enacted orsubstantively enacted by the balance sheet date. Deferred tax Deferred income tax is provided in full, using the liability method, ontemporary differences arising between the tax bases of assets and liabilitiesand their carrying amounts in the consolidated financial statements. However,the deferred income tax is not accounted for if it arises from initialrecognition of goodwill, initial recognition of an asset or liability in atransaction other than a business combination that at the time of thetransaction affects neither accounting nor taxable profit or loss. Deferredincome tax is determined using tax rates (and laws) that have been enacted orsubstantively enacted by the balance sheet date and are expected to apply whenthe related deferred income tax asset is realised or the deferred income taxliability is settled. Deferred income tax assets are recognised to the extent that it is probable thatfuture taxable profit will be available against which the temporary differencescan be utilised. Deferred income tax is provided on temporary differences arising on investmentsin subsidiaries and associates, except where the timing of the reversal of thetemporary difference is controlled by the Group and it is probable that thetemporary difference will not reverse in the foreseeable future. Property, plant and equipment Freehold properties held for administrative purposes, are stated in the balancesheet at their revalued amounts, being the fair value at the date ofrevaluation, less any subsequent accumulated depreciation and subsequentaccumulated impairment losses. Revaluations are performed with sufficientregularity such that the carrying amounts do not differ materially from thosethat would be determined using fair values at the balance sheet date. Any revaluation increase arising on the revaluation is credited in equity to theproperties revaluation reserve, except to the extent that it reverses arevaluation decrease for the same asset previously recognised in profit or loss,in which case the increase is credited to profit or loss to the extent of thedecrease previously charged. A decrease in the carrying amount arising on therevaluation of such land and buildings is charged to profit or loss to theextent that it exceeds the balance, if any, held in the properties revaluationreserve relating to a previous revaluation of that asset. Depreciation on revalued asset is charged to profit or loss. On the subsequentsale or retirement of a revalued property, the attributable revaluation surplusremaining in the properties revaluation reserve is transferred directly toretained earnings. No transfer is made from the revaluation reserve to retainedearnings except when an asset is derecognised. Fixtures and equipment are stated at cost less accumulated depreciation and anyaccumulated impairment losses. Depreciation is charged so as to write off the cost or valuation of assets overtheir estimated useful lives, using the straight-line method. The estimateduseful lives, residual values and depreciation method are reviewed at each yearend, with the effect of any changes in estimate accounted for on a prospectivebasis. The gain or loss arising on the disposal or retirement of an item of property,plant and equipment is determined as the difference between the sales proceedsand the carrying amount of the asset and is recognised in profit or loss. Intangible assets Intangible assets represent the cost of acquisition by the Group of rights,licences and know how. Such expenditure requires the immediate write-off ofexploration and development expenditure that the Directors do not consider to besupported by the existence of commercial reserves. Exploration, evaluation and development of mineral resources All costs associated with mineral exploration and investments are capitalised ona project-by-project basis, pending determination of the feasibility of theproject. Costs incurred include appropriate technical and administrativeexpenses but not general overheads. If an exploration project is successful, therelated expenditures will be transferred to mining assets and amortised over theestimated life of the commercial ore reserves on a unit of production basis.Where a licence is relinquished or a project abandoned, the related costs arewritten off. Where the Group maintains an interest in a project, but the valueof the project is considered to be impaired, a provision against the relevantcapitalised costs will be raised. The recoverability of all exploration and development costs is dependent uponthe discovery of economically recoverable reserves, the ability of the Group toobtain necessary financing to complete the development of reserves and futureprofitable production or proceeds from the disposition thereof. Impairment testing of goodwill, other intangible assets and property, plant andequipment At each balance sheet date, the Group reviews the carrying amounts of the assetsto determine whether there is any indication that those assets have suffered animpairment loss. If any such indication exists, the recoverable amount of theasset is estimated in order to determine the extent of the impairment loss (ifany). Where it is not possible to estimate the recoverable amount of anindividual asset, the Group estimates the recoverable amount of thecash-generating unit to which the asset belongs. Where a reasonable andconsistent basis of allocation can be identified, corporate assets are alsoallocated to individual cash-generating units, or otherwise they are allocatedto the smallest group of cash-generating units for which a reasonable andconsistent allocation basis can be identified. Intangible assets with indefinite useful lives and intangible assets not yetavailable for use are tested for impairment annually, and whenever there is anindication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value inuse. In assessing value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects currentmarket assessments of the time value of money and the risks specific to theasset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated tobe less than its carrying amount, the carrying amount of the asset(cash-generating unit) is reduced to its recoverable amount. An impairment lossis recognised immediately in profit or loss, unless the relevant asset iscarried at a revalued amount, in which case the impairment loss is treated as arevaluation decrease. Impairment losses recognised for cash-generating units, towhich goodwill has been allocated, are credited initially to the carrying valueof goodwill Where an impairment loss subsequently reverses, the carrying amount of the asset(cash-generating unit) is increased to the revised estimate of its recoverableamount, but so that the increased carrying amount does not exceed the carryingamount that would have been determined had no impairment loss been recognisedfor the asset (cash-generating unit) in prior years. A reversal of an impairmentloss of the assets other than goodwill is recognised immediately in profit orloss, unless the relevant asset is carried at a revalued amount, in which casethe reversal of the impairment loss is treated as a revaluation increase. Financial instruments Financial assets and liabilities are recognised on the group's balance sheetwhen the group has become a party to the contractual provisions of theinstrument. Financial assets Loans and receivables Trade receivables, loans, and other receivables that have fixed or determinablepayments that are not quoted in an active market are classified as 'loans andreceivables'. Loans and receivables are measured at amortised cost using theeffective interest method less any impairment. Interest income is recognised byapplying the effective interest rate, except for short-term receivables wherethe recognition of interest would be immaterial. Cash and cash equivalents Cash and cash equivalents comprise cash in hand and on deposit with banks. Available-for-sale financial assets Available-for-sale financial assets include non-derivative financial assets thatare either designated as such or do not qualify for inclusion in any of theother categories of financial assets. All financial assets within this categoryare measured subsequently at fair value, with changes in value recognised inequity, through the statement of changes in equity. Gains and losses arisingfrom investments classified as available-for-sale are recognised in the incomestatement when they are sold or when the investment is impaired. Impairment of financial assets Financial assets are assessed for indicators of impairment at each balance sheetdate. Financial assets are impaired where there is objective evidence that, as aresult of one or more events that occurred after the initial recognition of thefinancial asset, the estimated future cash flows of the investment have beenimpacted. For financial assets carried at amortised cost, the amount of theimpairment is the difference between the asset's carrying amount and the presentvalue of estimated future cash flows, discounted at the original effectiveinterest rate. The carrying amount of the financial asset is reduced by the impairment lossdirectly for all financial assets with the exception of trade receivables wherethe carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against theallowance account. Subsequent recoveries of amounts previously written off arecredited against the allowance account. Changes in the carrying amount of theallowance account are recognised in profit or loss. With the exception of available-for-sale financial assets, if, in a subsequentperiod, the amount of the impairment loss decreases and the decrease can berelated objectively to an event occurring after the impairment was recognised,the previously recognised impairment loss is reversed through profit or loss tothe extent that the carrying amount of the investment at the date the impairmentis reversed does not exceed what the amortised cost would have been had theimpairment not been recognised. In the case of impairment of available-for-sale assets, any loss previouslyrecognised in equity is transferred to the income statement. Impairment lossesrecognised in the income statement on equity instruments are not reversedthrough the income statement. Impairment losses recognised previously on debtsecurities are reversed through the income statement when the increase can berelated objectively to an event occurring after the impairment loss wasrecognised in the income statement. Financial liabilities and equity instruments issued by the Group Classification as debt or equity Financial liabilities and equity instruments are classified according to thesubstance of the contractual arrangements entered into. An equity instrument isany contract that evidences a residual interest in the assets of the entityafter deducting all of its financial liabilities. Where the contractual liabilities of financial instruments (including sharecapital) are equivalent to a similar debt instrument, those financialinstruments are classed as financial liabilities, and are presented as such inthe balance sheet. Finance costs and gains or losses relating to financialliabilities are included in the profit and loss account. Finance costs arecalculated so as to produce a constant rate of return on the outstandingliability. Where the contractual terms of share capital do not have any features meetingthe definition of a financial liability then such capital is classed as anequity instrument. Dividends and distributions relating to equity instrumentsare debited direct to equity. Compound financial instruments Compound financial instruments comprise both liability and equity components.At issue date, the fair value of the liability component is estimated bydiscounting its future cash flows at an interest rate that would have beenpayable on a similar debt instrument without any equity conversion option. Theliability component is accounted for as a financial liability. The difference between the net issue proceeds and the liability component, atthe time of issue, is the residual or equity component, which is accounted foras an equity instrument. Transaction costs that relate to the issue of a compound financial instrumentare allocated to the liability and equity components of the instrument inproportion to the allocation of the proceeds. The interest expense on the liability component is calculated by applying theeffective interest rate for the liability component of the instrument. Thedifference between any repayments and the interest expense is deducted from thecarrying amount of the liability. Other financial liabilities Other financial liabilities, including borrowings, are initially measured atfair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost usingthe effective interest method, with interest expense recognised on an effectiveyield basis. The effective interest method is a method of calculating the amortised cost of afinancial liability and of allocating interest expense over the relevant period.The effective interest rate is the rate that exactly discounts estimated futurecash payments through the expected life of the financial liability, or, whereappropriate, a shorter period. 4. Business and geographical segments The entire Group's activities are related to the exploration for and developmentof platinum group metals, gold and other minerals in Russia. The Directorstherefore believe that there is only that single class of business andgeographic segment. 5. Additions and disposals of property, plant and equipment 6 months to 12 months to 6 months to 30 June 31 December 30 June 2007 2006 2006 £ £ £ Net book value at the beginning of period 33,601 41,172 41,172Additions 2,148 3,215 1,134Revaluation increase 65,149 - -Disposals (604) - -Depreciation (1,353) (6,413) (3,009)Exchange differences (710) (4,373) (2,208) Net book value at the end of period 98,231 33,601 37,089 6. Additions and disposals of intangible assets Exploration, evaluation and development of mineral recourses 6 months to 12 months to 6 months to 30 June 31 December 30 June 2007 2006 2006 £ £ £ Net book value at the beginning of period 859,613 1,280,810 1,280,810Additions 7,307 49,116 17,761Reallocation to investment in associates - (324,744) (324,744)Impairment charge - (29,129) (29,129)Exchange differences (19,218) (116,440) (57,025) Net book value at the end of period 847,702 859,613 887,673 7. Investments in equity accounted investees Equity accounted investees represent (a) 50% interests in a Urals AlluvialPlatinum Limited (the "UAP") group and (b) 20% direct interest in certaincompanies, which in turn 80% owned by the UAP. By arrangements with the UAP theCompany cannot exercise full control in proportion to its total holding in thosecompanies and therefore 20% interest is being accounted as interest inassociates. 6 months to 12 months to 6 months to 30 June 31 December 30 June 2007 2006 2006 £ £ £ Investments in joint ventureNet book value 1 January 895,310 197,410 197,410Invested in the period - 2,657,735 2,081,029Reimbursed by partner in joint venture (1,870,419) -Group's share of losses in joint venture (4,054) (98,017) (83,530)Exchange differences (5,389) 8,601 (22,052) 885,867 895,310 2,172,857Investments in associatesNet book value 1 January 324,744 - -Invested in the period - 324,744 324,744Group's share of losses in associates (2,285) - - 322,459 324,744 324,744 Total at the end of period 1,208,326 1,220,054 2,497,601 Under UK GAAP investments in associates were included into "other investments"group. On transition from UK GAAP to IFRS other investments were split into twocategories and recognised: as investment in associates (as above) and thebalance of other investments of GBP 127 as non-current assets available forsale. 8. Reserves 30 June 31 December 30 June 2007 2006 2006 £ £ £ Capital redemption reserve 3,539,906 3,539,906 3,539,906Property revaluation reserve 65,149 - -Foreign currency translation reserve 54,891 55,729 36,941Share-based payments reserve 15,075 - -Equity component of convertible loan notes 49,167 49,167 49,167 3,724,188 3,644,802 3,626,014 The capital redemption reserve was created as result of share capitalrestructure in early years. There is no policy of regular transactions affectingcapital redemption reserve. The properties revaluation reserve arises on the revaluation of freeholdproperty. The foreign currency translation reserve represents exchange differencesrelating to the translation from the functional currencies of the Group'sforeign subsidiaries into GBP. The equity-settled employee benefits reserve arises on the grant of shareoptions to employees under the employee share option plan. The equity component on convertible loan notes represents the value ofconversion rights of the 8% convertible notes issued in 2006 (see note 9). 9. Borrowings 30 June 31 December 30 June 2007 2006 2006 £ £ £ Non-current:Minority shareholder loan 80,077 81,908 87,697Convertible loan notes - 427,568 415,002 80,077 509,476 502,699Current:Convertible loan notes 452,500 - -Other loans - -- 1,495,879 452,500 - 1,495,879 All borrowings held by the Group are unsecured The minority shareholder loan relates to long term funding advanced by the 20%minority shareholder in Eurasia PGM Limited in connection with the Company'sBaronskoye PGM-gold project. The minority shareholder loan is interest free andis repayable when the project reaches such an advanced stage of development thatit can be repaid out of the proceeds of either the project's cash flow orthrough the direct or indirect disposal to a third party of an interest in theproject. Convertible loan notes with a face value were issued on 31 March 2006, bearinginterest rate 8%, The notes are convertible at the holders' option at any timebefore maturity on 31 March 2008, into ordinary shares at the rate of £0.05 pershare. Loan notes to the face value of £230,000 were converted to ordinaryshares during April 2006. Any unconverted stock is redeemable at maturity on 31March 2008. Movement in the convertible loan notes is analyzed as follows: 6 months to 12 months to 6 months to 30 June 31 December 30 June 2007 2006 2006Liability component £ £ £ Proceeds of issue - 700,000 700,000Issue cost - (45,000) (45,000)Equity component - (74,539) (74,539)Liability component at the date of issue - 580,461 580,461 Balance at 01 January 427,568 - -Interest charged 38,683 77,233 39,170Interest paid in cash (13,751) (19,646) -Shares issued in lieu of interest payment - (5,852) -Loan notes converted into shares - (204,628) (204,629)Closing balance of liability component 452,500 427,568 415,002 Equity componentBalance at 01 January 49,167 - -Equity component on the date of issue - 74,539 74,539Loan notes converted into shares - (25,372) (25,372) 49,167 49,167 49,167 Company information Directors M. P. Martineau (Chairman)C. Schaffalitzky (Managing Director)G. C. FitzGerald (Non Executive) SecretaryM. J. de Villiers Head Office and Registered OfficeSuite 139, Grosvenor Gardens House35-37 Grosvenor GardensLondon, SW1W 0BSTelephone: +44 (0) 20 7932 0418Facsimile : +44 (0) 20 7976 6283E-mail: info@eurasia-mining.plc.ukwww.eurasiamining.co.uk Russian Office194 Lunacharsky StreetEkaterinburgRussiaTelephone: +(7) 3432 615187Facsimile: +(7) 3432 615924 Company Number 3010091 Advisers AuditorsGrant Thornton UK LLPGrant Thornton HouseMelton StreetEuston SquareLondon, NW1 2EP Registrars Capita IRG PlcThe Registry34 Beckenham RoadBeckenhamKent BR3 4TU Bankers National Westminster Bank plc1 Princes StreetLondonEC2R 8PH Solicitors Eversheds LLPSenator House85 Queen Victoria StreetLondonEC4V 4JL This information is provided by RNS The company news service from the London Stock Exchange