A n n U A L R E P o R T 2 0 1 0
Company
Particulars
DIRECToRS
Mr Josef El-Raghy,
Executive Chairman
Mr Harry Michael,
Chief Executive Officer
Mr Trevor Schultz,
Executive Director of Operations
Mr H Stuart Bottomley,
Senior Non Executive Director
Mr Colin Cowden,
Non Executive Director
Dr Thomas Elder,
Non Executive Director
Professor G Robert T Bowker,
Non Executive Director
CoMPAnY SECRETARY
Mrs Heidi Brown
CHIEF FInAnCIAL oFFICER
Mr Mark Di Silvio
GEnERAL MAnAGER – EGYPT
Mr Youssef El-Raghy
HEAD oFFICE
57 Kishorn Road
Mount Pleasant, Western Australia, 6153
T: + 61 8 9316 2640
F: + 61 8 9316 2650
W: www.centamin.com
EGYPT oFFICE
361 El-Horreya Road
Sedi Gaber
Alexandria, Egypt
T: + 2 0354 1125 9
F: + 2 0352 2635 0
BAnKERS
Australia
National Australia Bank Limited
100 St Georges Terrace,Perth WA 6000
Egypt
National Societe General Bank
54 Elbatal Ahmed Abdel Aziz Street
Cairo, Egypt
Commercial International Bank
Sultan Hussein Branch
Alexandria, Egypt
United Kingdom
Clydesdale Bank Plc
50 Lothian Road
Edinburgh EH3 9BY
ii
AUDIToRS
Deloitte Touche Tohmatsu
Level 14, Woodside Plaza,
240 St Georges Terrace
Perth WA 6000
UK BRoKERS
Ambrian Partners Limited
Old Change House,
128 Queen Victoria Street
London EC4V 4BJ, United Kingdom
T: + 44 (0) 207 7634 4700
Bank of America Merrill Lynch
2 King Edward Street
London EC1A 1HQ, United Kingdom
T: + 44 20 7996 1000
Stifel Nicolaus Weisel
10 Dominion Street, 5th Floor
London EC2M 2EE, United Kingdom
T: + 20 7877 4300
FInAnCIAL PUBLIC
RELATIonS ADVISER
Buchanan Communications
45 Moorfields, London EC2Y 9AE
T: + 44 (0) 20 7466 5000
SToCK EXCHAnGES
The Company is listed on the following
stock exchanges:
-
the Main Market of the London Stock
Exchange (LSE:CEY); and
the Toronto Stock Exchange (TSX:CEE).
-
The Primary Listing is in London.
LoCATIon oF REGISTERS
oF SECURITIES
Australia
Computershare Investor Services Pty Ltd
Level 2, 45 St Georges Terrace
Perth WA 6000
T: + 61 8 9323 2000
T: + 61 8 9323 2033
Canada
Computershare
100 University Avenue, 8th Floor
Toronto, Ontario, ON M5J 2Y1
T: + 1 416 263 9311
F: + 1 416 981 9777
United Kingdom
Computershare Investor Services
PO Box 82, The Pavilions, Bridgwater Road
Bristol BS99 7NH, England
T: + 44 (0) 870 702 0003
F: + 44 (0) 870 703 6116
Contents
Ch air m an’s Rep or t
Re v ie w o f o p er a t ion s
Dir ec t or s ’ Rep or t
Remuner a t ion Rep or t
01
0 2
10
17
Man ag emen t Dis cu s sio n & A n al y sis 2 3
A udi t or Indep endence Declar a t ion
3 4
Cor p or a t e Go v er n ance S t a t emen t
3 5
Indep enden t A udi t or ’s Rep or t
41
Dir ec t or s ’ Declar a t ion
4 3
S t a t emen t o f Compr ehen si v e Income 4 4
S t a t emen t o f F in ancial P o si t ion
4 5
S t a t emen t o f Ch ang e s in Equi t y
4 6
S t a t emen t o f C a s h F lo w s
4 8
no t e s t o t he F in ancial S t a t emen t s
4 9
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Chairman’s
Report
dear Shareholders this year’s annual report is one that captures the final transition of
your company from junior explorer to a gold producer, a path travelled that has been very
rewarding on many levels for all those involved. With the commissioning of the Sukari gold
mine the Company has reopened the highly prospective yet underexplored egyptian gold
fields and whilst we view our achievements to date with pride we do see great challenges
and opportunities ahead. your company is well placed and looking forward to both the
challenges and the opportunities.
During the first half of the year
construction activities continued
at Sukari with well over 1500
people on site. The January
quarter then saw the focus shift
to commissioning of the Stage 1
oxide circuit. The April quarter saw
the commissioning of the Stage 2
sulphide circuit, our first quarter
of commercial production and a
maiden operating profit before tax
of over $19 million for the quarter.
At the end of the financial year the
Company held over $31 million in
cash, had no debt, no hedging and
is able to fund the planned Sukari
expansion from Sukari cash flow.
In parallel with the Stage 1 and 2
completion of Sukari, underground
decline development progressed
well throughout the year with nearly
2km of decline work completed and
the commencement of ore drive
development remaining on schedule
for the last quarter of 2010. It is
envisaged that early in calendar
2011 high grade ore from the
underground will supplement the
open pit ore being fed to the plant.
After Stage 2 plant commissioning
handover our construction team
rolled immediately into Stage 3
(5Mtpa) plant expansion activities
with orders for key long lead items
placed during the period and
detailed design well underway. The
Stage 3 expansion remains on track
for completion by mid 2011.
The Stage 4 (8-10Mtpa) Scoping
Study was also commenced during
2010 with the goal of achieving
+500,000oz per annum of gold
production. This rate of production
is more in line with the size of
the Sukari resource and reserve,
both of which continued to grow
significantly through the year and
we see every indication that this
growth will continue. Exploration
efforts are now looking further afield
than Sukari alone and we have been
encouraged by the early results
from locations such as Quartz ridge
to the east of Sukari.
Corporately the Company continues
to evolve. The Company’s shares
trade with good volume on the TSX
where they are included in the TSX
gold index. In November 2009 the
Company’s share trading in London
moved from the AIM market to the
main market. Following this the
Company was admitted to the FTSE
250 in June 2010. In March 2010,
Mr Harry Michael was appointed
Chief Executive Officer. Harry’s
experience in building and operating
large scale mines in Africa will be
invaluable as we continue to push
for production and company growth.
As the first modern gold mine in
Egypt, this achievement is indeed
a testament to our dedicated staff,
many of whom have been with our
Company for more than 10 years.
We have seen employees grow over
the years to now be managers and
skilled operators and it is these
people that have built the Company.
It is a particular credit to our
operating team that within our first
year of operation a lost time injury
frequency rate of 0.23 per 200,000
manhours was achieved which is
well below mining industry accident
frequency statistics in more
established mining environments.
I would like to take the opportunity
to thank our previous Chairman,
Mr Sami El-Raghy, who along with
fellow director Mr Brian Speechly,
stood down from the Board at the
end of 2009. Sami’s work in Egypt
which began in the early 1990’s has
set the base for growth for both the
Company and the industry within
Egypt and with the development
of Sukari his vision is beginning to
be realized.
I would like to close by thanking
His Excellency Sameh Fahmy,
the Minister for Petroleum and
Mineral Resources for his continued
support in the Company’s activities.
Furthermore, I would like to thank
my co-directors for their counsel
during the year, our dedicated
team at Sukari, in Alexandria, and
of course our Company Secretary
in Perth.
Your Company is now well placed to
be a large scale, long life, low cost
gold producer.
On behalf of the Board of Directors
Josef El-Raghy
Chairman
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1
Review of
operations
Centamin egypt limited
(“Centamin” or “the Company”) is
a mineral exploration, development
and mining company that has been
actively exploring in egypt since
1995. the Company’s principal
asset is the Sukari gold Project,
located in the eastern desert
of egypt.
For the financial year ended 30
June 2010, 67,101 ounces of gold
was produced from the Sukari
open pit mine. A total of 4.2Mt of
ore @ 0.89g/t Au was mined for
the year from Stage 1 and 2 of the
open pit at an average waste to
ore ratio of 3:1. During the year,
mine development has progressed
through the oxide contact and into
the higher grade sulphide zones
toward the end of the financial
year. Whilst greater quantities of
sulphide ore were being exposed
throughout the year, the transitional-
sulphide contact was slightly deeper
than originally anticipated (approx
15m) deferring the full presentation
of the higher grade sulphides to
the process plant. Full sulphide
exposure in the Stage 1 pit is now
scheduled early in the forthcoming
year. Mine productivity continued
to improve throughout the year and
it is anticipated that a positive and
significant reduction in unit mining
cost will result throughout the
foreseeable future.
Operational Performance
Financial Year ended 30 June 2010
Ore Mined
Total Mined
Mine Head Grade
Strip Ratio
Ore Processed
Mill Head Grade
Gold Recovery
Gold Produced (1)
Cash Operating Cost of Production (2)
Gold Sold
Average Sales Price
(‘000t)
(‘000t)
(g/t)
waste/ore
(‘000t)
(g/t)
(%)
(oz)
US$/oz
(oz)
US$/oz
4,183
17,003
0.89
3.1
1,906
1.37
87
67,101
478
63,753
1,152
(1) Gold produced is gold poured and does not include gold-in-circuit at
period end.
(2) Cash operating costs excludes royalties, exploration and corporate
administration expenditure.
2
In preparation for an increase in
mining rate early in 2011, orders
have been placed for a fourth
Terex RH120 excavator, three
CAT785C dump trucks, a CAT993K
front end loader and further
ancillary equipment.
Initial ore treatment through the
Sukari process plant commenced
in late 2009. Total process plant
throughput for the year was
1,906,182 tonnes at an average
grade of 1.37g/t. Whilst the result
was a pivotal achievement for
the Company, higher process
rates were impacted by a specific
number of unscheduled stoppages
to replace prematurely worn or
damaged SAG mill liners and lifters.
To mitigate this issue, the plant
management team are introducing
a steel liner system during the
second half of calendar 2010 which
should bring reline schedules more
closely to design expectations. A
dump leach trial during the year is
well underway with material gold
recovery expected to commence
in the second half of this year. By
financial year end, total placement
of low grade oxide totaled over
2.0Mt at an average dumped grade
of 0.5 g/t with about 50% of this
tonnage under irrigation.
Cash cost per ounce for the year
was $478, which was higher
than expected due primarily to
lower gold production through the
commissioning phase of Stage 1
and Stage 2. Cost per ounce is
expected to decrease throughout
the remainder of the year as feed
grade and plant availability improve.
Underground Mine Development
Underground development at Sukari commenced in December 2009, with
a decline development advance of 1,924 metres, (inclusive of main decline,
ventilation decline and escape way) completed for the reporting period.
First development ore is scheduled to be produced during the fourth
quarter of 2010.
Additional equipment was being mobilized in preparation for the above
production phase by the end of the reporting period.
Sukari Project Expansion
Stage 3 (5Mtpa Expansion)
The Stage 3 expansion project
primarily involves installation of
a secondary crushing circuit and
related infrastructure that will be
integrated into the existing process
plant crushing circuit. Stage 3
is targeting a mill throughput
increase of 25% to 5Mtpa and
project completion is expected in
mid 2011. As at the end of June
2010, award of key contracts for
crushers, feeders and high voltage
switchgear to support the Stage 3
plant expansion were underway.
Construction activities are
scheduled to commence during the
latter half of 2010.
Stage 4 (8-10Mtpa Expansion)
As a part of the Stage 4
development, a scoping study was
initiated during the second half of
the financial year to determine the
optimum process flow route for a
plant expansion of up to 10Mtpa.
Initial test work has indicated a
number of crushing and grinding
alternatives exist to achieve this
outcome. Upon completion of the
study, scheduled for the second
half of 2010, detailed design and
costing of the preferred route as
well as ordering of long lead items
will commence. Stage 4 completion
is targeted to occur in 2012.
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3
R e v i e W o f o
P e R A t i o n S
Sukari Mineral Resource Estimation
Similar to previous years, the current financial year has seen continued and sustained growth in resources for the
Sukari Gold Project. Measured and Indicated (“M&I”) resources are now estimated to be 235.73Mt @ 1.45g/t Au
for 10.99Moz Au with additional Inferred resources of 68.9Mt @ 1.6g/t for 3.5Moz (Table 1). The Measured and
Indicated resource has increased by 1.08Moz (11%) from the previous financial year (Figure 1).
Exploration drilling over the year showed the high grade Hapi and related zones extend from the far south Amun
Zone north to the area of current drilling in the Ra and Pharaoh zones (Figure 2). These zones, along the entire
strike length of the Sukari Hill (2.5km), are the target of current infill and extension drilling with eight diamond
coring rigs.
Table 1 – Total Resource (June 2010)
Measured
Indicated
Total
Measured + Indicated
Inferred
Cut-off
(g/t Au)
Tonnes
(Mt)
Grade
(g/t Au)
Tonnes
(Mt)
Grade
(g/t Au)
Tonnes
(Mt)
Grade
(g/t Au)
0.5
0.7
1
84.01
61.23
40.54
1.42
1.72
2.17
151.72
112.85
75.95
1.47
1.77
2.22
235.73
174.08
116.49
1.45
1.75
2.20
Gold
(Moz)
10.99
9.81
8.26
Tonnes
(Mt)
Grade
(g/t Au)
Gold
(Moz)
68.9
50.1
33.8
1.6
2.0
2.5
3.5
3.2
2.7
Note to Table: Figures in table may not add correctly due to rounding. Proven and probable ore reserves are included in
mineral resources.
inferred
measured & indicated
Proven & Probable
15.0
12.0
9.0
6.0
3.0
0.0
)
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0.6
0.7
0.8
0.9
0.8
1.2
1.3
1.7
1.3
1.7
3.5
3.9
7.1
3.3
3.5
6.4
3.2
4.9
3.3
2.8
3.7
3.7
2.5
4.3
1.4
3.1
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Figure 1 – Sukari Resource Growth from 2000 to June 2010
4
The resources are estimates of
recoverable tonnes and grades
using Multiple Indicator Kriging
(“MIK”) with block support
correction. Measured resources lie
in areas where drilling is available at
a nominal 25 x 25 metre spacing,
Indicated resources occur in
areas drilled at approximately 25
x 50 metre spacing and Inferred
resources exist in areas of broader
spaced drilling. The resource
model extends from 9700mN to
12200mN and to a maximum
depth of 2mRL (a maximum
depth of approximately 1,050
metres below wadi level). Mineral
resource estimate is adjusted to
end of May 2010 mining surface
and for historical underground
mining voids.
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Figure 2 – Plan View of Sukari Porphyry with Upgraded Resource Distribution
R e v i e W o f o
P e R A t i o n S
Sukari Mineral Reserve
During the year, mineral reserves were increased in relation to the Sukari Gold Project.
The total Sukari mineral reserves stand at 7.1 million ounces, an increase of 0.7 million ounces from the previously
reported 6.4 million ounces (April 2009). The new mineral reserves are based on drilling up to 01 November
2009 and a gold price of US$700 per ounce. Details of the new reserves calculated for Sukari are listed in the
table below.
Table 2 – Sukari Open Pit Mineral Reserve Estimate (as at 31 December 2009)
(reported at a cut-off grade of 0.4 g/t Au for oxide and sulphide material and 0.5 g/t for transitional)
Proven
Probable
Mineral Reserve
Tonnes
(Mt)
Au
(g/t)
Tonnes
(Mt)
Au
(g/t)
new Reserve
Previous Reserve
69.1
64
1.37
1.38
90.1
78
1.41
1.43
Tonnes
(Mt)
159.3
142
Au
(g/t)
Cont Au
(Moz)
1.39
1.4
7.1
6.4
Note:
New reserve figure includes 1,167,798t @ 0.74g/t for 27,762ozs of stockpile material in the proven category
6
Exploration
During the year, resource definition
was concentrated in the Pharaoh
Zone following the high grade Hapi
Zone at depth, deeper Hapi zones
at the basal porphyry contacts,
the west dipping high grade shear
zone basal porphyry contact at
the eastern margins and other
mineralised structures within the
porphyry. Drilling also occurred
in the more southern Amun and
Ra zones of the Sukari porphyry
from 10600N to 11200N, testing
the along strike continuity of the
Amun Deeps porphyry block and
mineralisation, Hapi, Downthrust
Zones and Hangingwall Porphyries.
Encouraging high grade assay
intersections have been returned
from the Pharaoh Zone in the
targeted Hapi Zone, deeper Hapi
and eastern basal porphyry contact
zones, and deep drilling in the
Ra Zone between 10800N and
11000N intersected high grade
porphyry blocks in the Amun Deeps
and Downthrust zones. Results
have significantly increased the
resource base and advanced
understanding of the complex
controls on gold mineralisation
along strike and at depth.
The drilling continues to show the
high grade Hapi and related zones
extend from the far south Amun
Zone north to the area of current
drilling in the Ra and Pharaoh
zones. These zones, along the
entire strike length of the Sukari Hill
(2.5km), are the target of current
infill and extension drilling with eight
diamond coring rigs.
Figure 3 – Long Section of Sukari Porphyry showing significant intersections, key zones and targeted
drilling areas
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R e v i e W o f o
P e R A t i o n S
Significant intersections received for the year include:
D1454 – 32m @ 5.65g/t Au from 691m
D1471 – 19m @ 13.7g/t Au from 804m
D1509 – 13m @ 4.06g/t Au from 600m
D1455 – 42m @ 2.79g/t Au from 423m
D1479 – 16m @ 8.16g/t Au from 547m
D1529 – 156m @ 2.07g/t Au from 230m
D1466 – 19m @ 4.88g/t Au from 583m
D1482 – 21m @ 4.19g/t Au from 593m
D1530 – 38m @ 2.56g/t Au from 180m
D1468 – 16m @ 4.29g/t Au from 441m
D1490 – 45m @ 2.11g/t Au from 325m
D1552 – 37m @ 4.84g/t Au from 624m
D1470 – 20m @ 3.61g/t Au from 310m
D1494 – 24m @ 3.19g/t Au from 311m
Regional Exploration
Work at Quartz Ridge prospect commenced in the year, drilling returned encouraging results and intersected
the outcropping quartz vein over a strike length of 300m and the anomalous and interpreted porphyry like felsic
intrusive rock unit hosting the quartz veins, shear zones and gold mineralisation (Figure 4). Mineralisation remains
open along strike and at depth.
QZ013- 6m @ 2.92 g/t Au from 89m
QZ016 – 15m @ 1.05g/t Au from 1m
QZ022– 7m @ 2.30g/t Au from 77m
QZ036- 3m @ 15.54 g/t Au from 40m
QZ020 – 2m @ 9.68g/t Au from 52m
QZ036 – 3m @ 15.54g/t Au from 40m
Wide spaced regional work continued to increase coverage of the mapping and geochemistry as the exploration
push continues away from the Sukari hill (Figure 4).
8
Figure 4 – Regional surface geochemistry and prospect
map in the Sukari Exploitation Licence
Australian Projects
The Company is entitled to a royalty over the Nelson’s Fleet gold project near St Ives, Western Australia, from the
St Ives Gold Mining Co Pty Ltd, a subsidiary of Gold Fields Ltd. The Company has not been informed of any mining
of the tenement to date.
Competent Persons Statement
Quality Assurance and Control and Qualified Person
The information in this report
that relates to ore reserves has
been compiled by Mr Andrew
Pardey. Mr Pardey is a Member
of the Australasian Institute of
Mining and Metallurgy and is a full
time employee of the Company.
He has sufficient experience
which is relevant to the style of
mineralisation and type of deposit
under consideration and to the
activity he is undertaking, to qualify
as a “Competent Person” as
defined in the 2004 Edition of the
“Australasian Code for Reporting
of Exploration Results, Mineral
Resources and Ore Reserves” and
is a “Qualified Person” as defined
in the “National Instrument 43-
101 of the Canadian Securities
Administrators” and ”CIM Definition
Standards For Mineral Resources
and Mineral Reserves” of December
2005 as prepared by the CIM
Standing Committee on Reserve
Definitions of the Canadian Institute
of Mining. Mr Pardey’s written
consent has been received by the
Company for this information to be
included in this report in the form
and context which it appears.
The information in this report that
relates to ore reserves has also
been independently verified by
Mr Pieter Doelman, an employee
of Coffey Mining Pty Ltd Perth.
Mr Doelman is a Member of the
Australasian Institute of Mining
and Metallurgy and has sufficient
experience, relevant to the style of
mineralisation and type of deposit
under consideration and to the
activity he is undertaking, to qualify
as a “Competent Person” as
defined in the 2004 Edition of the
“Australasian Code for Reporting
of Exploration Results, Mineral
Resources and Ore Reserves” and
is a “Qualified Person” as defined
in the “National Instrument 43-
101 of the Canadian Securities
Administrators” and the “CIM
Definition Standards For Mineral
Resources and Mineral Reserves”
of December 2005 as prepared by
the CIM Standing Committee on
Reserve Definitions of the Canadian
Institute of Mining. Mr Doelman
consents to the inclusion of this
estimate in reports.
The information in this report
that relates to mineral resources
is based on work completed
independently by Mr Nicolas
Johnson, who is a Member of the
Australian Institute of Geoscientists.
Mr Johnson is a full time employee
of Hellman and Schofield Pty Ltd
and has sufficient experience
which is relevant to the style of
mineralisation and type of deposit
under consideration and to the
activity which he is undertaking to
qualify as a “Competent Person” as
defined in the 2004 edition of the
“Australasian Code for Reporting
of Exploration Results, Mineral
Resources and Ore Reserves” and
is a “Qualified Person” as defined in
“National Instrument 43-101 of the
Canadian Securities Administrators”.
Mr Johnson consents to the
inclusion in the report of the matters
based on his information in the form
and context in which it appears.
Information in this report which
relates to exploration, geology,
sampling and drilling is based on
information compiled by geologist
Mr Richard Osman who is a full time
employee of the Company, and is a
member of the Australasian Institute
of Mining and Metallurgy with more
than five years experience in the
fields of activity being reported on,
and is a ‘Competent Person’ for this
purpose and is a “Qualified Person”
as defined in “National Instrument
43-101 of the Canadian Securities
Administrators”. His written consent
has been received by the Company
for this information to be included in
this report in the form and context
which it appears.
The assay samples were analysed
by Ultra Trace Pty Ltd, Canning
Vale, Western Australia.
Refer to the updated Technical
Report which was filed in May
2009 for further discussion of
the extent to which the estimate
of mineral resources/reserves
may be materially affected by any
known environmental, permitting,
legal, title, taxation, socio-political,
marketing or other relevant issue.
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9
Directors’
Report
the directors of Centamin egypt limited submit herewith the annual financial report of the
Company for the financial year ended 30 June 2010. in order for the Company to comply
with the provisions of the Corporations Act 2001, the directors’ Report is as follows:-
10
Directors
The names and particulars of the Directors of the Company during or since
the end of the financial year are:-
Mr Josef El-Raghy
B.Comm
Executive Chairman (appointed 3 March 2010), age 39
Director since 26 August 2002
Josef El-Raghy was Managing Director/CEO of the Company
until 3 March 2010. Mr El-Raghy holds a Bachelor of
Commerce Degree from the University of Western Australia
and had a ten year career in stock broking. He was formerly
a director of both CIBC Wood Gundy and Paterson Ord
Minnett. His expertise in international capital markets has greatly assisted
the Company in its fundraising and development activities. Mr El-Raghy
was also a director of ISIS Resources Plc (now Verona Pharma Plc) from 24
February 2005 to 18 September 2006.
Mr Harry Michael
B. Mining Engineering (Hons), Member AusIMM, Member AICD
Chief Executive officer, age 48
Director since 3 March 2010
Mr Michael was Executive Director, Chief Operating Officer
and Vice President of Operations of Equinox Minerals Limited
(TSX:EQN), between 2004 and 2009 where he oversaw
the development, commissioning and operation of the large
scale Lumwana Copper Mine in Zambia, one of the largest
new copper mines to be developed in recent years. In addition he was
responsible for all Government negotiations in securing various fiscal and
other operating licence agreements necessary for project development.
Prior to joining Equinox, he was responsible for completing the bankable
feasibility study (“BFS”) for the Sukari Gold Project, Centamin’s flagship
mine, during 2003 and 2004. His past experience includes the role of
Chief Executive Officer of Geita Gold Mine (AngloGold Ashanti) in Tanzania
from 1998 to 2002, one of the largest gold mines in Africa, producing
500,000 ounces of gold per annum, where he was responsible for the
construction and operation of the mine. Prior to this, Mr Michael was
General Manager of the Iduapriem Gold Mine in Ghana (AngloGold Ashanti)
from 1995 to 1998 and was responsible for various CIL and Heap Leach
expansions as well as operations. He has held senior management roles
in Granny Smith Gold Mine in Western Australia (Barrick Gold – 1994 to
1998) and Porgera Gold Mine in Papua New Guinea (majority owned by
Barrick – 1990 to 1994) as well as other operational roles in the gold and
iron ore sectors of the Australian mining industry. Mr Michael has also
held a non executive director position with Red Back Mining Inc (TSX:RBI)
from 2003 to March 2010, playing a key role in the growth and strategic
direction of the company during the time while Redback grew from and
explorer through to a major gold producer.
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the Target Group of Unit Trusts first
under the ownership of Dawnay Day
and subsequently with J Rothschild
Investment Management. In 1984, he
joined Fidelity International in London,
working with the ERISA group, focused
on UK and European markets. Since
leaving Fidelity, Stuart has consulted
for numerous private and public
companies, advised many Australian
companies on admissions to AIM and
assisted in IPOs and other fundraisings.
He is currently a non executive director
of African Consolidated Resources Plc
(since 27 May 2005), Polar Star Mining
Corp (since 17 April 2009), Starfield
Resources Inc (since 1 February 2007)
and Verona Pharma Plc (since 24
February 2005).
Mr Colin Cowden
FAII, ASA, ACIS, ACIM, FNIBA, CD
non Executive Director, age 66
Chairman Audit Committee
Member Remuneration Committee
Director since 8 March 1982
Colin Cowden is the
Executive Chairman
of Cowden Limited,
a licensed insurance
broking company formed
in 1972. Cowden Limited is a prominent
broking firm in Western Australia with
branch offices in Sydney, Melbourne
and Adelaide. Mr Cowden is a qualified
accountant and Chartered Secretary,
and is a Fellow of the Australian
Insurance Institute. Mr Cowden has
been a director of Wentworth Holdings
Limited since 26 October 2005,
and from 27 November 1998 until
27 October 2005, was a director of
OAMPS Limited.
Mr Trevor Schultz
M.A (ECON), M.Sc (Min Eng)
Executive Director of operations, age 68
Director since 20 May 2008
Mr Schultz has a Masters
Degree in Economics
from Cambridge
University, a Masters of
Science Degree in Mining
from the Witwatersrand University and
completed the Advanced Management
Program at Harvard University. With
more than 40 years experience at the
executive management and board
level with leading international mining
companies, including BHP, RTZ/CRA,
Pegasus Gold and Ashanti Goldfields,
Trevor was most recently the President
and CEO of Guinor Gold Corporation.
His roles have included development
of several new mining operations in
Africa, South America and the U.S.A.,
negotiations with various governments
and their agencies and project financing
and capital raisings. Mr Schultz is
currently a director of Pacific Road
Capital Management. From 1 April
2003 until 31 December 2005, Mr
Schultz was a director of Guinor Gold
Corporation, from 1 December 2003
to 15 June 2006 was a director of
Southern Era Pty Ltd and from 1
October 1996 to 31 December 2003
was a director of Ashanti Goldfields
Pty Ltd.
Mr H. Stuart Bottomley
non Executive Director, age 65
Senior Independent Director
Member Audit Committee
Chairman Compliance/Corporate
Governance Committee
Director since 26 September 2005
Stuart Bottomley
has broad non
executive knowledge
and experience in
international asset
management, risk management and
corporate funding. After working as
a stockbroker for nine years, Stuart
worked as a portfolio manager for
Dr Thomas G. Elder
PhD, FIMMM, FGS
non Executive Director, age 71
Chairman Remuneration Committee
Member Compliance/Corporate
Governance Committee
Director since 8 May 2002
Dr Elder is a geology
graduate of Durham
University and post-
graduate NATO Scholar
at the University of
Oslo. His extensive background in
mineral exploration was gained with
major companies including BP and
Rio Tinto. Dr Elder ran exploration
programmes in the UK, Spain, Italy,
Portugal and Greenland for Cominco,
prior to his appointment as worldwide
Exploration Manager for BP Minerals
in 1983. Following the take-over by Rio
Tinto in 1989, he was a director of Rio
Tinto Exploration Limited until 1995,
focusing on project development in the
Former Soviet Union. Dr Elder was a
non executive director of Angus & Ross
from 12 January 2006 to 31 January
2009 and, having held the position of
President from 4 October 1998 to 30
September 2007, Dr Elder stepped
down as President but remained a
non executive director of Mano River
Resources Inc until 25 June 2009.
Professor G. Robert Bowker
PhD, GAICD
non Executive Director, age 60
Member Remuneration Committee
Member Audit Committee
Member Compliance/Corporate
Governance Committee
Director since 21 July 2008
Professor Bowker retired
from the Australian
Foreign Service in June
2008 after a 37 year
career specialising in
Middle East issues. He was Australian
Ambassador to Egypt (2005 to 2008)
and Jordan (1989 to 1992), in addition
to postings in Syria (1979 to 1981) and
Saudi Arabia (1974 to 1976). Professor
12
Bowker was accredited from Cairo
as a non-resident ambassador to
Libya, Sudan, Syria and Tunisia.
Professor Bowker has a PhD from
the Centre for Arab and Islamic
Studies, Australian National
University 2001, an MA from the
Centre for Middle East and Central
Asian Studies, Australian National
University 1995, a BA (Hons)
Indonesian and Malayan Studies
and Political Science, Melbourne
University 1970 and completed an
RAF Arabic course, Beaconsfield,
UK 1988.
Mr Sami El-Raghy
B.Sc. (Hons), FAusIMM, FSEG,
MAICD
Executive Chairman, age 68
(retired 31 December 2009)
Director from 29 April 1993 to 31
December 2009
A graduate of
Alexandria University
in 1962, Mr El-Raghy
worked in Egypt
and Europe before
moving to Australia in 1968 and
joining American Smelting and
Refining Company (Asarco). He
was instrumental in the discovery
and development of a number
of gold mines, including the
Wiluna Gold Mine for Asarco and
the Mt Wilkinson Gold mine for
Chevron Exploration. Mr El-Raghy
recognised the potential of the
Marymia Dome and the Barwidgee
Yandal Belt long before these
areas became the most sought
after mining areas in Australia. Mr
El-Raghy brought to the Board over
41 years experience in the industry,
both in Australia and overseas.
Mr G. Brian Speechly
FAusIMM
non Executive Director, age 76 (retired 31 December 2009)
Director from 15 August 2000 to 31 December 2009
Mr Speechly is a Fellow of the Australasian Institute of Mining
and Metallurgy with over 50 years experience in the mining
industry. During his career, Mr Speechly has been involved
in over 320 mining projects and is recognised in Australia
and overseas as an expert in both underground and open pit
mining and design. He is particularly noted for his innovative and low cost
approaches to mining issues. Mr Speechly has been a director of Dynasty
Metals & Mining Inc since 28 April 2004.
Management
Mrs Heidi Brown
GCertAppFin (Finsia), ACIS
Company Secretary
Mrs Brown is a Chartered Secretary with over 12 years experience in the
finance and securities industries. Mrs Brown holds a Graduate Certificate
of Applied Finance and Investment and a Diploma of Financial Advising
through the Financial Services Institute of Australasia (Finsia).
Mr Mark Di Silvio
B.Bus, MBA, CPA
Chief Financial officer
Mr Di Silvio holds a Bachelor of Business from Curtin University in Western
Australia and completed a Master of Business and Administration at the
University of Western Australia. A Certified Practicing Accountant with
over 19 years post graduate experience in the resources sector, Mr Di
Silvio commenced his career with a variety of finance based roles within
the gold mining sector whilst based in Kalgoorlie, Western Australia. Mr Di
Silvio joined oil and gas independent Woodside Energy Limited in 1998,
gaining oilfield experience through the financial management of joint
ventures and the development of accounting and compliance management
systems. Prior to leaving Woodside in 2007, Mr Di Silvio was responsible
for the financial management of Woodside’s Mauritanian oilfield assets.
Mr Di Silvio was CFO for Central Petroleum Limited, a junior oil and gas
exploration company based in Perth, Western Australia prior to joining
Centamin Egypt Limited on 25 July 2008.
Mr Youssef El-Raghy
General Manager - Egyptian operations
An officer graduate of the Egyptian Police Academy Mr El-Raghy held
senior management roles within the Egyptian Police force for a period in
excess of ten years, having attained the rank of captain, prior to joining
the Company. Mr El-Raghy has extensive contacts within the government
and industry and maintains excellent working relationships with all of the
Company’s stakeholders within Egypt.
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Directors’ Meetings
The following table sets out the number of Directors’ meetings (including meetings of the committees of directors)
held during the financial year and the number of meetings attended by each Director (while they were a Director
or committee member). During the financial year, 8 Board meetings, 2 Nomination and Remuneration Committee
meetings, 2 Compliance/Corporate Governance Committee meetings and 6 Audit Committee meetings were held.
Board of
Directors
nomination and
Remuneration
Committee
Compliance/
Corporate
Governance
Committee
Audit
Committee
Director
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Mr J El-Raghy
Mr H Michael (2)
Mr T Schultz
Dr T G Elder
Mr H S Bottomley
Professor G R T Bowker
Mr C Cowden
Mr S El-Raghy (1)
Mr G B Speechly (1)
8
2
8
8
8
8
8
5
5
8
2
8
8
8
8
8
5
5
-
-
-
2
-
2
2
-
-
-
-
-
2
-
2
2
-
-
-
-
-
2
2
2
-
-
-
-
-
-
2
2
2
-
-
-
-
-
-
-
6
6
6
-
-
-
-
-
-
6
6
6
-
-
(1) Mr S El-Raghy and Mr G B Speechly retired from the Board effective 31 December 2009.
(2) Mr H Michael joined the Board on 3 March 2010.
In addition to these formal meetings, during the year the Directors considered and passed ten (10) Circular
Resolutions pursuant to clause 61 of the Company’s Constitution.
Principal Activities
Future Developments
The consolidated entity’s principal
activities during the course of the
financial year were the exploration
for precious and base metals,
production of gold and ongoing
development at the Sukari project.
Dividends
No dividends have been declared or
paid since the end of the previous
financial year.
Changes in
State of Affairs
There was no change in the state
of affairs of the consolidated entity
during the financial year.
It is the objective of the Company
to continue to drill at the Sukari
project, so as to increase the overall
size of the geological resource
whilst at the same time, increasing
gold production.
Disclosure of information regarding
likely developments in the
operations of the consolidated entity
in future financial years and the
expected results of those operations
is likely to result in unreasonable
prejudice to the consolidated entity.
Accordingly, this information has
not been disclosed in this report.
14
Share Options
options Converted During the Financial Year
options Lapsed Subsequent to Balance Date
A total of 7,520,000 unlisted options were exercised
during the financial year to 30 June 2010. The details of
these options are as follows:-
number of
ordinary shares
under option
690,000
2,060,000
250,000
Exercise
Price A$
0.7106
1.0500
1.4034
Expiry Date
31 January 2010
31 May 2010
15 October 2010
950,000
0.3500
31 October 2010
500,000
1.5000
28 November 2010
No options have lapsed subsequent to balance date.
Employee option Plans
At the Annual General Meeting on 20 November 2006,
shareholders approved the Employee Option Plan
2006. The following options issued to Executives and
Employees are in existence as at the date of this report:
number of
ordinary shares
under option
830,000
250,000
Exercise
Price A$
1.7022
1.1999
Expiry Date
16 April 2011
25 August 2011
2,320,000
750,000
1.7022
0.7033
16 April 2011
28 October 2011
1,000,000
1.0000
19 December 2011
350,000
1.8658
06 August 2012
The issuing entity was Centamin Egypt Limited. The
market weighted average closing price of Centamin
Egypt Limited shares during the 2010 financial year was
C$2.03 (2009: A$1.06). No amount was unpaid on
these shares.
The following options were not issued under any of
the Employee Option Plans, however were issued
in accordance with employment contracts and/
or agreements and are in existence at the date of
this report:
number of
ordinary shares
under option
Exercise
Price A$
Expiry Date
100,000
0.3500
31 October 2010
1,630,150
1.2000
31 December 2012
500,000
1.5000
28 November 2010
The holders of these options do not have the right, by
virtue of the option, to participate in any share issue
or interest issue of the Company, body corporate or
registered scheme. The issuing entity for all options
was Centamin Egypt Limited.
options Lapsed During the Financial Year
A total of 185,000 unlisted options lapsed during the
financial year to 30 June 2010, due to employees
ceasing work with the Company. The details of these
options are as follows:-
number of
ordinary shares
under option
Exercise
Price A$
Expiry Date
60,000
1.7022
16 April 2011
125,000
0.6750
28 November 2011
options Exercised Subsequent to Balance Date
290,000 options have been exercised subsequent to
balance date. The issuing entity was Centamin Egypt
Limited. No amount was unpaid on these shares. The
details of these options are as follows:-
number
Exercise
Price A$
Expiry Date
290,000
1.7022
16 Apr 2011
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Broker Warrants
Broker Warrants Converted
During the Financial Year
A total of 10,357,710 unlisted broker warrants were
exercised during the financial year to 30 June 2010.
The details of these broker warrants are as follows:-
Events Subsequent to Balance Date
There were no events subsequent to balance date
requiring disclosure.
Review of Operations
A review of the Company’s operations is located at the
beginning of this Annual Report.
number of
ordinary shares
under option
Exercise
Price A$
Expiry Date
Indemnification of Directors & Auditors
4,770,720
1.2000
23 November 2009
4,636,990
0.6500
10 February 2011
788,437
1.5600
16 July 2011
161,563
1.5200
26 August 2011
The issuing entity was Centamin Egypt Limited. No
amount was unpaid on these shares.
There are no broker warrants in existence as at the date
of this report.
Environmental Regulations
The consolidated entity is currently complying with
relevant environmental regulations and has no
outstanding environmental orders against it.
During the financial year, the Company paid a premium
in respect of a contract insuring the directors and
officers of the Company and any related body corporate
against a liability incurred as a director or officer to the
extent permitted by the Corporations Act 2001.
The Company has not otherwise, during or since the
end of the financial year, except to the extent permitted
by law, indemnified or agreed to indemnify an officer or
auditor of the Company or of any related body corporate
against a liability incurred as such an officer or auditor.
16
Remuneration Report
(Audited)
The Directors of Centamin Egypt Limited present the Remuneration Report prepared in accordance with section
300A of the Corporations Act 2001 for the Company and the consolidated entity for the financial year ended
30 June 2010. For the purposes of this report, Directors and executives of the Company and consolidated
entity are defined as those persons having authority and responsibility for planning, directing and controlling
the major activities of the Company and consolidated entity (“the Group”), directly or indirectly, including any
director (whether executive or otherwise) of the parent company. This Remuneration Report forms part of the
Directors’ Report.
Overview
Remuneration levels for directors
and executives are competitively
set to attract the most qualified
and experienced candidates.
Details of the Company’s
remuneration strategy for the 2010
financial year are set out in this
Remuneration Report.
This Remuneration Report:
explains the Board’s policies
relating to remuneration of
directors and executives;
discusses the relationship
between these policies and the
Company’s performance; and
sets out remuneration
details for each Director and
senior executive.
The fees paid to Non Executive
Directors are set at levels which
reflect both the responsibilities of,
and the time commitments required
from, each Non Executive Director
to discharge their duties and are
not linked to the performance of
the Company.
The remuneration strategy for
the Chief Executive Officer (CEO)
and executives, including the
Company Secretary, comprise a
fixed cash component and where
applicable, statutory superannuation
contributions, an annual merit
based performance bonus and
the issue of share options or
other share based incentives in
the Company which is intended
to provide competitive rewards
to attract high calibre executives.
The issue of performance bonuses
and share options, whilst not
dependent on the performance of
the Company, are aligned with the
ongoing performance assessment
of the incumbent, following review
and assessment by the Board
of Directors.
Criteria used to determine the
annual merit based performance
bonus for the CEO and executives,
during the preproduction phase,
is the setting of key objectives for
each executive and measuring
performance against these
objectives. Key objectives will
normally include capital budget
criteria where performance will
be measured against progress
indicators. These key objectives
will largely be determinable by
the objective assessment of
performance by the CEO. There are
no specific performance based key
financial indicators set and bonuses
and/or options are at the discretion
of the Board. The Nomination and
Remuneration Committee reviews
the CEO’s performance and makes
a recommendation to the Directors.
Share options are offered to
executives at the discretion of the
Directors, having regard, among
other things, to the length of service
with the Group, the past and
potential contribution of the person
to the Group and in some cases,
performance of the individual.
There is no Board policy in relation
to limiting the recipient exposure to
risk in relation to securities.
The table below sets out summary
information about the consolidated
entity’s earnings and movements in
shareholder wealth for the five years
to 30 June 2010:
30 June 2010
US$’000
30 June 2009
US$’000
30 June 2008
US$’000
30 June 2007
US$’000
30 June 2006
A$’000
Revenue
Net profit/(loss) before tax
Net profit/(loss) after tax
Share price at start of year
Share price at end of year
Dividends
Basic earnings per share (cents)
Diluted earnings per share (cents)
37,710
17,028
12,870
A$1.79
A$2.88
-
1.26
1.26
2,893
(22,271)
(22,102)
A$1.21
A$1.79
-
(2.40)
(2.40)
6,789
4,647
4,203
A$1.12
A$1.21
-
0.51
0.51
2,815
6,890
6,890
A$0.74
A$1.12
-
1.11
1.10
1,140
1,011
1,011
A$0.27
A$0.74
-
0.19
0.19
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Directors and Senior Management
The following persons acted as Directors of the
Company during or since the end of the financial year:-
Mr Josef El-Raghy (Chairman)
Mr Sami El-Raghy (Chairman),
retired 31 December 2009
Mr Harry Michael (Chief Executive Officer),
appointed 3 March 2010
Mr Trevor Schultz (Executive Director of Operations)
Mr H Stuart Bottomley
(Senior Independent Non Executive Director)
Dr Thomas G Elder (Non Executive Director)
Mr Colin Cowden (Non Executive Director)
Mr G Brian Speechly (Non Executive Director),
retired 31 December 2009
Professor G. Robert Bowker (Non Executive Director)
The term ‘senior management’ is used in this
remuneration report to refer to the following persons:
Mrs Heidi Brown (Company Secretary)
Mr Mark Di Silvio (Chief Financial Officer)
Remuneration of Directors and Senior Management
The Nomination and Remuneration Committee reviews the remuneration packages of all Directors and senior management
on an annual basis. Remuneration packages are reviewed and determined with due regard to current market rates and are
benchmarked against comparable industry salaries.
2010
Short-term employee benefits
Long-term
employee
benefits
Post-
employment
benefits
Share-based
payment
Salary
& Fees
A$
Bonus
A$
non-
monetary
A$
Leave8
A$
Super-
annuation
A$
options
& rights
A$1
non Executive Directors
T Elder
C Cowden
G B Speechly
H S Bottomley
G Bowker
Executive officers
55,000
50,458
18,348
55,000
25,114
S El-Raghy2
J El-Raghy
H Michael3
T Schultz
M Di Silvio
H Brown
Total
240,012
541,329
187,602
457,400
305,680
186,382
2,122,325
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27,525
21,5005
44,0255
-
80,6045
58,1045
36,275
268,033
-
-
-
-
-
3,612
34,315
-
-
-
-
37,927
-
4,541
1,651
-
52,385
-
-
15,137
-
-
14,175
87,889
18
Total
A$
55,000
54,999
19,999
55,000
105,024
265,124
619,669
202,739
624,949
632,893
236,832
-
-
-
-
-
-
-
-
86,945
269,109
-
356,054
2,872,228
2009
Short-term employee benefits
Long-term
employee
benefits
Post-
employment
benefits
Share-based
payment
Salary
& Fees
A$
Bonus
A$
non-
monetary
A$
Leave8
A$
Super-
annuation
A$
options
& rights
A$1
non Executive Directors
T Elder
C Cowden
G B Speechly
H S Bottomley
G Bowker4
Executive officers
50,815
46,965
35,297
50,815
45,056
S El-Raghy
J El-Raghy
T Schultz
M Di Silvio6
H Brown
M Smith7
Total
479,615
397,549
370,098
278,172
186,214
116,268
2,056,864
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
43,0005
41,1185
68,0815
52,3255
10,586
23,0975
-
-
-
-
-
7,167
44,178
-
-
-
-
-
4,226
3,176
-
4,506
-
-
-
-
13,500
-
Total
A$
50,815
51,191
38,473
50,815
49,562
529,782
482,845
-
-
-
-
-
-
-
291,709
729,888
72,442
61,888
-
402,939
272,188
139,365
238,207
51,345
25,408
426,039
2,797,863
1
Options value is calculated in accordance with
the Black-Scholes pricing method.
2 Mr S El Raghy retired on 31 December 2009.
4
5
Professor Bowker was appointed on 21 July 2008.
Values shown represent taxes paid in Egypt
on behalf of the Executive Officer.
Upon cessation of employment Mr El-Raghy was
paid A$750,000 in accumulated leave entitlements with
a further A$212,966 due and payable as at
30 June 2010.
3 Mr H Michael was appointed 3 March 2010.
6 Mr Di Silvio was appointed 25 July 2008.
7 Mr Smith retired on 7 August 2008.
8
Long term employment benefits are in relation
to accrued benefits of long service leave.
No Director or senior management person appointed during the period received a payment as part of his or her
consideration for agreeing to hold the position.
Employment Contracts
Remuneration and other terms of employment for the following Directors and executives are formalised in
employment agreements, the terms of which are set out below:-
Josef el-Raghy
Chairman
trevor Schultz
executive director of operations
Heidi Brown
Company Secretary
term: 3 years (expiring 01
term: 3 years (expiring 15 August
term: 2 years (expiring
September 2013), 6 months
notice of termination period
2011), 3 months notice of
termination period
21 July 2012), 3 months notice
of termination period
base salary: A$600,000 (net
of taxes in Egypt) pa, reviewed
annually by the Nomination and
Remuneration Committee
Harry michael
Chief executive officer
term: 3 years (expiring 03 March
2013), 6 months notice of
termination period
base salary: A$550,000
including superannuation,
reviewed annually by
the Nomination and
Remuneration Committee
base salary: A$550,000 (net
base salary: A$180,000 +
of taxes in Egypt) pa, reviewed
annually by the Nomination and
Remuneration Committee
9% superannuation, reviewed
annually by the Nomination and
Remuneration Committee
No director or executive is entitled
to any termination payments
apart from remuneration payable
up to and including the date of
termination and all payments due
by way of accrued leave.
mark di Silvio
Chief financial officer
(appointed 25 July 2008)
term: 2 years (expiring 25 July
2012), 3 months notice of
termination period
base salary: A$325,000 (net
of taxes in Egypt) pa, reviewed
annually by the Nomination and
Remuneration Committee
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19
d iRe
C t o R S ’
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P o R t
options issued to Directors and senior management
Options are issued to Directors and senior management under the Employee Option Plan 2006 (previously under the
Employee Option Plan 2002) as part of their remuneration. Options are offered to Directors and senior management at the
discretion of the Directors, having regard, among other things, to the length of service with the Group, the past and potential
contribution of the person to the Group. The following options have been issued to Directors and senior management up to
30 June 2010 and granted subsequent to balance date:-
name
office
Grant Date
no of
Unquoted
options
Fair Value
at Grant
Date A($)
Exercise
Price
A($)
Expiry Date
C N Cowden
Non Executive Director
8 December 2005
500,000
0.1495
0.4355
8 December 2008
T G Elder
Non Executive Director
8 December 2005
500,000
0.1495
0.4355
8 December 2008
H S Bottomley
Non Executive Director
8 December 2005
500,000
0.1495
0.4355
8 December 2008
T S Schultz
Executive Director
of Operations
19 December 2008*
1,000,000
0.3568
1.0000
19 December 2011
M Di Silvio
Chief Financial Officer
25 August 2008*
250,000
0.3070
1.1999
25 August 2011
H Brown
Company Secretary
16 April 2008
250,000
0.4015
1.7022
16 April 2011
6 August 2009**
350,000
0.6714
1.8658
6 August 2012
*
As at 30 June 2010, 100% of these options had vested.
** As at 30 June 2010, only 50% of these options had vested.
The options granted vest and are exercisable over a period of 12 months, with 50% vesting and exercisable after 6 months
and the other 50% vesting and exercisable after 12 months of grant. These options have a term of 3 years.
options exercised by Directors and senior management
There were no options exercised by Directors and senior management during the year.
Value of Director and senior management options granted, exercised and lapsed during the year
The following table shows the value of Director and senior management options granted, exercised and lapsed during the year:-
name
S El-Raghy
J El-Raghy
C N Cowden
T G Elder
G B Speechly
H S Bottomley
T Schultz
G Bowker
H Michael
M Di Silvio
H Brown
options
Granted
Value at
Grant Date
A$
options
Exercised
options
Lapsed
Value at
Exercise Date
A$
Value at Time
of Lapse
A$
Value of options
Included in
Remuneration for
the Year (1)
Percentage of
Total Remuneration
for the Year that
Consists of options
A$
%
-
-
-
-
-
-
-
-
-
283,946
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
86,945
-
-
269,109
-
-
-
-
-
-
-
13.9%
-
-
42.5%
-
(1) The value of options granted during the period is recognised in compensation over the vesting period of the grant, in accordance with
Australian Accounting Standards.
20
Directors’ Shareholdings
The relevant interest of each Director in the share capital of the Company shown in the Register of Directors’
Shareholdings as at the date of this report are:-
Director
no. of Fully paid ordinary shares
no. of share options
J El-Raghy
H Michael
C Cowden
T Elder
H S Bottomley
T Schultz
G Bowker
69,195,086
75,000
1,203,626
250,000
2,650,000
-
-
-
-
-
-
1,000,000
-
Since the end of the previous financial year, no Director of the Company has received or become entitled to receive
any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable
by Directors shown in the consolidated accounts) because of a contract made by the Company, its controlled
entities or a related body corporate with the Director or with a firm of which the Director is a member, or with an
entity in which the Director has a substantial interest.
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d iRe
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Rounding of Amounts
Non-Audit Services
The Company is of a kind referred to in Class Order
98/100 issued by the Australian Investments and
Exchange Commission dated 10 July 1998 and in
accordance with that Class Order, amounts in the
Financial Report and the Directors’ Report have been
rounded off to the nearest thousand dollars, unless
otherwise stated.
Auditor’s Independence Declaration
The Auditor’s Independence Declaration is included on
page 34 of the financial report.
Tax and due diligence services were provided by
Deloitte Touche Tohmatsu during the year. The Audit
Committee is satisfied that the provision of non-audit
services, during the year, by the auditor (or by another
person or firm on the auditor’s behalf) is compatible
with the general standard of independence for auditors
imposed by the Corporations Act 2001. The Audit
Committee is satisfied that the services provided did not
compromise the external auditor’s independence for the
following reasons:-
all non-audit services have been reviewed by the
Audit Committee to ensure they do not adversely
affect the integrity and objectivity of the auditor; and
none of the services undermine the general
principles relating to auditor independence as set
out in the Code of Conduct - APES 110 Code of
Ethics for Professional Accountants, issued by the
Accounting Professional & Ethics Standards Board,
including reviewing or auditing the auditor’s own
work, acting in a management or decision making
capacity for the Company or jointly sharing economic
risks and rewards.
Details of amounts paid or payable to the auditor
for non-audit services provided during the year
by the auditor are outlined in Note 23 to the
financial statements.
This Directors’ Report is signed in accordance with a
resolution of the directors made pursuant to s.298(2) of
the Corporations Act 2001.
On behalf of the Directors
Colin Cowden
Director
Perth, 31 August 2010
22
Management Discussion
& Analysis
the following management’s discussion and Analysis of the financial Condition and Results
of operations (“md&A”) for Centamin egypt limited (the “Company” or “Centamin”) should
be read in conjunction with the directors’ Report and the audited financial Report for the
year ended 30 June 2010. the effective date of this md&A is 31 August 2010.
The financial information presented
in this MD&A has been prepared
in accordance with Australian
Accounting Standards and
Interpretations, other mandatory
professional reporting requirements
and the Corporations Act 2001.
In addition to these Australian
requirements, further information
has been included in the
Consolidated Financial Statements
for the year ended 30 June 2010
in order to comply with applicable
Canadian securities law, as the
Company is listed on the Toronto
Stock Exchange.
Additional information relating to
the Company, including other public
announcements and the Company’s
Annual Information Form, is
available at www.centamin.com and
www.sedar.com.
All amounts in this MD&A are
expressed in United States dollars
unless otherwise identified.
General
Centamin is a mineral exploration,
development and mining company
that has been actively exploring in
Egypt since 1995. The principal
asset of Centamin is its interest
in the Sukari Project, located
in the Eastern Desert of Egypt.
Construction at the Sukari Project
commenced in March 2007 and
the first gold bar being produced on
26 June 2009.
Optimal design throughput at the
Sukari Gold Project was achieved
during December 2009. In January
2010, the Company announced
that the Sukari Gold Project had
achieved yet another important
milestone with the commencement
of gold exports to a nominated
overseas gold refinery. From a
financial accounting standpoint,
commercial production commenced
on 1 April 2010.
The Sukari Project is the first large-
scale modern gold mine in Egypt.
Centamin’s operating experience in
Egypt gives it a significant first-
mover advantage in acquiring and
developing other gold projects in the
prospective Arabian-Nubian Shield.
Forward Looking
Statements
Some of the statements contained
in this MD&A, including those
relating to strategies and other
statements, are predictive in nature,
and depend upon or refer to future
events or conditions, or include
words such as “expects”, “intends”,
“plans”, “anticipates”, “believes”,
“estimates” or similar expressions
that are forward looking statements.
Forward looking statements include,
without limitations, the information
concerning possible or assumed
further results of operations as set
forth herein. These statements
are not historical facts but instead
represent only expectations,
estimates and projections regarding
future events and are qualified in
their entirety by the inherent risks
and uncertainties surrounding future
expectations generally.
The forward looking statements
contained in this MD&A are not
guarantees of future performance
and involve certain risks and
uncertainties that are difficult to
predict. The future results of the
Company may differ materially from
those expressed in the forward
looking statements contained in
this MD&A due to, among other
factors, the risks and uncertainties
inherent in the business of the
Company. The Company does not
undertake any obligation to update
or release any revisions to these
forward looking statements to reflect
events or circumstances after the
date of this MD&A or to reflect the
occurrence of unanticipated events.
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23
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Highlights for the Year
Underground Development
Corporate
The Company’s highlights for the
year were:
Plant Construction
Construction and commissioning
of the Sukari process plant was
completed during the financial
year, enabling commercial
production of gold to commence
during 2010.
Exploration
The Sukari mineral resource
was upgraded to 10.99 million
ounces of gold Measured and
Indicated, plus 3.5 million
ounces of gold Inferred at a
0.5g/t cut off grade. An increase
of 11% in Measured and
Indicated resources compared to
last financial year.
In February 2010, the Company
announced that the total
reserves had increased to 7.1
million ounces, an increase of
0.7 million ounces (11%) from
the previously reported 6.4
million ounces as announced
in April 2009. The new mineral
reserves are based on drilling
up to 1 November 2009 and
utilized a gold price of US$700
per ounce.
open Pit Mine Production
Open pit mine production
continued to progress well from
the Sukari open pit. A total of
4.2Mt of ore @ 0.89g/t Au was
mined for the year from Stage
1 and 2 of the open pit at an
average waste to ore ratio of
3:1. Orders for additional mobile
equipment have been placed,
which will see a further three
CAT 785C dump trucks and a
fourth Terex RH120 excavator
in operation during 2011,
thereby increasing the rate of
mine development.
Underground development at
In July 2009, the Company
announced that it had attained
subscriptions from various North
American resource focussed
funds for a private placement
of 19 million ordinary shares
at an offering price of C$1.56
per share. The offer was fully
subscribed and raised gross
proceeds of C$29.6M.
In August 2009, the Company
announced its intention to apply
for admission to the Official List
of the UK Listing Authority (the
“Official List”) and to trading on
the London Stock Exchange’s
Main Market for listed securities.
Following completion of
due diligence, the Company
commenced trading on the
London Stock Exchange’s Main
Market for listed securities on 6
November 2009. Subsequent
to this, the Company closed its
association with the Australian
Securities Exchange (“ASX”) in
an effort to streamline listing and
compliance costs. Removal from
the ASX official list occurred on
29 January 2010.
Board changes during the year
saw that Mr Sami El-Raghy
announced his resignation from
the Board on 31 December
2009 along with fellow director
Mr Gordon Brian Speechly.
During 2010, Mr Harry Michael
joined the Board of Centamin as
Chief Executive Officer. Following
Mr Michael’s appointment, Mr
Josef El-Raghy, transitioned to
the role of Executive Chairman
of Centamin.
Sukari commenced in December
2009. Underground works are
performed by Barminco, an
experienced underground mining
contractor, with supervision
and engineering management
provided by Company personnel.
For the financial year ended
June 2010, underground
decline development recorded
an advance of 1,924 meters,
inclusive of main decline,
ventilation decline and escape
way infrastructure. First
development ore is scheduled to
be produced during the fourth
quarter of 2010 and stoping
panels are scheduled to reach
commercial production during
early 2011.
Sukari Project Expansion
Future development of the
Sukari gold project involves the
Stage 3 and Stage 4 expansion
programmes. The Stage 3
expansion project primarily
involves installation of a
secondary crushing circuit and
related infrastructure that will
be integrated into the existing
process plant crushing circuit.
Stage 3 is targeting a mill
throughput increase of 25% to
5Mtpa and project completion is
expected in mid 2011.
As a part of the Stage 4
development, a scoping
study was initiated during the
second half of the financial
year to determine the optimum
process flow route for a plant
expansion up to 10Mtpa. Initial
test work has indicated a
number of crushing and grinding
alternatives exist to achieve this
outcome. Upon completion of
the study, scheduled for the
second half of 2010, detailed
design and costing of the
preferred route as well as
ordering of long lead items will
commence. Stage 4 completion
is targeted to occur in 2012.
24
Results of Operations
The Company recorded a profit for the year primarily due to the commencement of operations. The results for the
year reflect the commencement of operations at the Sukari Gold Mine, with exploration related expenditure being
capitalised according to the Company’s accounting policies.
Selected Financial Information
The table below sets forth selected financial data relating to the Company’s years ended 30 June 2010,
30 June 2009 and 30 June 2008. This financial data is derived from the Company’s audited consolidated
financial statements.
Condensed Statement of Comprehensive Income
Year ended
30 June
2010
$US’000
Year ended
30 June
2009
$US’000
Year ended
30 June
2008
$US’000
37,710
888
(3,547)
(2,205)
2,893
12
6,789
202
-
-
-
-
Revenue
Other income
Cost of sales
Production royalty
Foreign exchange gain/(loss)
3,614
(19,284)
3,427
Administrative expenses
(5,813)
(2,142)
(3,432)
Depreciation and amortisation
(11,897)
(544)
(309)
Share based payments
(1,722)
(3,206)
(2,030)
Profit/(Loss) before income tax
17,028
(22,271)
Tax (expense)/income
(4,158)
169
4,647
(444)
net profit/(loss) for the period
12,870
(22,102)
4,203
Earnings/(Loss)per share
- Basic (cents per share)
- Diluted (cents per share)
1.26
1.26
(2.40)
(2.40)
0.51
0.51
Revenue reported comprises
proceeds from gold sales and
interest revenue applicable on the
Company’s available cash and
working capital balances and term
deposit amounts. On a comparative
annual basis, Revenue is higher due
to the commencement of gold sales
during the June quarter of 2010.
Other income includes the profit on
the sale of assets and silver sales
associated with gold production.
Cost of sales represents the
cost of mining and processing
ore, offset by the movement in
production inventory which has
been transferred to the Statement of
Financial Position.
Production royalty represents the
3% royalty payable to the Egyptian
Government for gold bullion and
associated metals. This is also
applicable to pre-production
revenues earned during the year.
Foreign exchange gain reported is
attributable to positive exchange
rate movement during the period
as a result of the strengthening
Australian dollar against the United
States dollar.
Administrative expenses comprise
consultants, Directors’ fees, stock
exchange listing fees, employee
salaries and corporate office
administration expenses. The
amount disclosed for the twelve
months ended 30 June 2010 period
is higher than the corresponding
period due to due diligence fees
associated with the Company’s
main board listing on the London
Stock Exchange.
Depreciation and amortisation
includes the depreciation of fixed
assets and amortisation of waste
material movement and mine
properties. Also includes provision
for rehabilitation.
Share based payments reported
relate to the requirement to
recognise the cost of granting
options (or warrants) to directors,
and employees under the Employee
Option Plan or for payment for
services done under a contractual
arrangement. Calculation of the
cost is performed in accordance
with the requirements of AIFRS
over the option (or warrant)
vesting period.
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Condensed Statement of Financial Position
Year ended
30 June
2010
$US’000
Year ended
30 June
2009
$US’000
Year ended
30 June
2008
$US’000
Total current assets
56,771
73,364
185,529
Total non-current assets
421,597
333,058
174,968
Total assets
478,368
406,422
360,497
Total current liabilities
Total non-current liabilities
Total liabilities
net assets
23,204
2,622
25,826
8,504
1,736
10,240
6,762
778
7,540
452,452
396,182
352,957
Current assets for the 2010 year are lower than previous years due to
the consumption of funds made in favour of continued investment in the
development and construction of the Sukari Gold Project.
Non-current assets have increased throughout 2010 as a result of net
expenditure incurred for construction and development related to the
Sukari project and for ongoing exploration resource drilling at Sukari. The
Company’s accounting policy is to capitalise expenditure of this nature
under the category of Exploration, Evaluation & Development.
Current liabilities are higher in 2010 compared to the same period last
year, representing additional creditor commitments associated with the
commencement of operations of the Sukari Gold Project.
Non-current liabilities as at 30 June 2010 have increased from that
reported last financial year end due to the continued provision for
restoration and rehabilitation.
Condensed Statement of Changes in Equity
Year ended
30 June 2010
$US’000
Year ended
30 June 2009
$US’000
Total equity at beginning of period
396,182
352,957
Movement in issued equity
Movement in reserves
Profit/(Loss) for the period
Total equity at end of period
48,210
(4,720)
12,870
452,542
63,938
1,389
(22,102)
396,182
Issued equity increased during the 2009 year driven by an equity raising
completed in July 2009 and the exercising of employee options previously
granted under the employee share options scheme.
Reserves have decreased due to the exercise of employee options.
Profit for the year ended 30 June 2010 is analysed under the section
Condensed Statement of Comprehensive Income.
26
Condensed Statement of Cash Flows
Net cash flow from operating activities
Net cash flow from investing activities
Net cash flow from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial period
Effects of exchange rate changes
Cash and cash equivalents at the end of the financial period
Year ended
30 June 2010
$US’000
Year ended
30 June 2009
$US’000
21,878
1,908
(103,966)
(179,974)
41,768
58,186
(40,320)
(119,880)
68,609
3,037
31,326
182,329
6,160
68,609
The net cash flow from operating activities for the year ended 30 June 2010 is attributable to income received
from gold sales, offset by payments for production costs, exploration expenditure and corporate compliance
related costs.
The net cash flow from investing activities for the year ended 30 June 2010 is attributable to Sukari development
expenditure which includes acquisition of mining fleet, preproduction overhead and materials cost.
The net cash flow from financing activities for the year ended 30 June 2010 is attributable to equity raised during
July 2009, offset by costs of equity raising, and the conversion of employee share options.
Selected Quarterly Information
The following table sets out selected financial information for and as of the end of the quarterly periods as shown
in the table. Information for the quarter ended 30 June 2010 is derived from management-prepared unaudited
financial statements of the Company.
31 Mar
2010
31 Dec
2009
30 Sep
2009
30 Jun
2009
31 Mar
2009
31 Dec
2008
30 Sep
2008
Three months ended
Revenue ($USD’000)
30 Jun
2010
37,194
66
148
Net profit/(loss) ($USD’000)
15,047
(1,635)
(1,333)
Net profit/(loss) c.p.s **
Net profit/(loss) c.p.s – diluted
1.45
1.45
(0.22)
(0.22)
(0.05)
(0.05)
302
791
0.08
0.08
414
385
998
1,108
5,302
(2,970)
(21,225)
(3,209)
0.53
0.53
(0.31)
(0.31)
(2.78)
(2.78)
(0.36)
(0.36)
net assets ($USD’000)
452,542
430,468
431,527
426,948
396,182
383,385
329,694
350,883
** USD per share
Revenue for the three months ended 30 June 2010 comprises income from gold sales and interest revenue
applicable on the Company’s available cash and term deposit amounts. The amount reported June quarter is
higher than previous quarters reflecting the commencement of commercial production and revenue accounting.
net income for the three months ended 30 June 2010 is a significantly higher than previous quarters of the 2010
financial year and is due to the commencement of revenue accounting from operations.
Liquidity and Capital Resources
At 30 June 2010, the Company had cash and cash equivalents of $31,326,000 compared to $68,609,000 at
30 June 2009. The majority of funds have been invested in short term deposits. The decrease in cash position is
due to the completion of Stage 1 and 2 plant construction activities at the Sukari Gold Project during the current
financial year. Commercial production commenced on 1 April 2010.
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The following is a summary of the Company’s outstanding commitments as at 30 June 2010:
Payments due
Total
Less than 1
year
1 to 5 years
After 5 years
US$’000
US$’000
US$’000
US$’000
Employee entitlements
Creditors
Provision for Rehabilitation
Current tax liabilities
Total commitments
1,613
21,318
2,451
444
25,826
1,442
21,318
-
444
23,204
171
-
-
-
171
-
-
2,451
-
2,451
The Company’s financial commitments are limited to discretionary spending on work programmes at the Sukari
Gold Project, administration expenditure at the Egyptian and Australia office locations and for general working
capital purposes.
During 2009, the Company entered into an agreement with Macquarie Bank Limited (“MBL”) to provide a
corporate loan facility of up to US$25 million. The facility remains subject to final documentation and remains
undrawn to date. In return for entering into this agreement, Centamin issued MBL with 1,630,150 unquoted
share options, exercisable at a price of A$1.20 and expiring 31 December 2012. Included within the share based
payments expense in the prior year is an amount of A$705,203 in respect of the share options granted to MBL.
Other than described above the Company has no other off Statement of Financial Position arrangements.
Outstanding Share
Information
Significant Accounting
Estimates
As at 31 August 2010, the
Company had 1,029,108,333 fully
paid ordinary shares issued and
outstanding. The following table sets
out the fully paid ordinary shares
issuable under the Employee Share
Option Plan and Warrants issued:
As at
31 August 2010
number
Shares on Issue
1,029,108,333
Options issued but
not exercised
4,660,150
1,033,768,483
Segment Disclosure
The Company is engaged in the
business of exploration for precious
and base metals only, which is
characterised as one business
segment only.
In the application of the Group’s
accounting policies, which are
described in Note 3, management
is required to make judgments,
estimates, and assumptions
about carrying values of assets
and liabilities that are not readily
apparent from other sources.
The estimates and associated
assumptions are based on historical
experience and various other factors
that are believed to be reasonable
under the circumstance, the results
of which form the basis of making
the judgments. Actual results may
differ from these estimates.
The estimates and underlying
assumptions are reviewed on
an ongoing basis. Revisions
to accounting estimates are
recognised in the period in which
the estimate is revised if the revision
affects only that period, or in the
period of the revision and future
periods if the revision affects both
current and future periods.
The following are the critical
judgments that management has
made in the process of applying
the Group’s accounting policies and
that have the most significant effect
on the amounts recognised in the
financial statements:
Impairment of
Inter Company Loans
The Company made loans and
advances to its subsidiaries as
detailed in Note 9 to the financial
statements. These loans and
advances were established for the
purpose of routing funds out of
Australia to fund exploration and
resource development in Egypt.
The recovery of these loans and
advances is entirely dependent
upon returns from the successful
development of mining operations
in Egypt or from surpluses from
the sale of either the subsidiary
companies or their projects.
28
Recovery of Capitalised
Exploration Evaluation and
Development Expenditure
The Company capitalises
exploration, evaluation and
development expenditure
incurred on ongoing projects. The
recoverability of this capitalised
exploration expenditure is entirely
dependent upon returns from the
successful development of mining
operations or from surpluses from
the sale of the projects or the
subsidiary companies that control
the projects. In accordance with
AASB 136 Impairment of Assets,
at the point that it is determined
that any capitalised exploration
expenditure is definitely not
recoverable, it is written off.
Internal Controls
Disclosure controls and procedures
are designed to provide reasonable
assurance that all relevant
information is gathered and
reported to management, including
the CEO and CFO, on a timely basis
so that appropriate decisions can be
made regarding public disclosure.
Management, with the participation
of the certifying officers, has
evaluated the effectiveness of
the design and operation, as of
30 June 2010, of the Company’s
disclosure controls and procedures
(as defined by the Canadian
Securities Administrators). Based
on that evaluation, the certifying
officers have concluded that such
disclosure controls and procedures
are effective and designed to ensure
that material information relating to
the Company and its subsidiaries
is known to them by others within
those entities.
Internal controls over financial
reporting are designed to provide
reasonable assurance regarding
the reliability of our financial
reporting and compliance with
generally accepted accounting
principles in our financial
statements. Management has
evaluated the design of internal
control over financial reporting
and has concluded that such
internal controls over financial
reporting are designed to provide
reasonable assurance regarding
the reliability of financial reporting
and the preparation of financial
statements for external purposes in
accordance with generally accepted
accounting principles in Canada.
In addition, there have been no
changes in the Company’s internal
control over financial reporting
during the year ended 30 June
2010 that have materially affected,
or are reasonably likely to materially
affect, its internal control over
financial reporting.
Financial Instruments
At 30 June 2010, the Company has
exposure to interest rate risk which
is limited to the floating market rate
for cash.
The Company does not have foreign
currency risk for non-monetary
assets and liabilities of the Egyptian
operations as these are deemed
to have a functional currency of
United States dollars. The Company
has no significant monetary foreign
currency assets and liabilities apart
from Australian dollar and United
States dollar cash term deposits.
The Company currently does not
engage in any hedging or derivative
transactions to manage interest rate
or foreign currency risks.
Foreign Investment
in Egypt
Foreign investments in the
petroleum and mining sectors in
Egypt are governed by individual
production sharing agreements
(concession agreements) between
foreign companies and the
Ministry for Petroleum and Mineral
Resources or EMRA (as the case
may be) and are individual Acts
of Parliament.
Title, exploitation and development
rights to the Sukari Project are
granted under the terms of the
Concession Agreement promulgated
as Law No. 222 of 1994, signed on
29 January 1995 and effective from
13 June 1995. The Concession
Agreement was issued by way
of Presidential Decree after the
approval of the People’s Assembly
in accordance with the Egyptian
Constitution and Law No. 61 of
1958. The Concession Agreement
was issued in accordance with the
Egyptian Mines and Quarries Law
No. 86 of 1956 which allows for the
Ministry to grant the right to parties
to explore and mine for minerals
in Egypt.
While the Company will be the
first foreign company to develop a
modern large-scale gold mine in
Egypt there is significant foreign
investment in the petroleum sector.
Several large multinational oil and
gas companies operate successfully
in Egypt, some of which have long
histories in the country and have
dedicated significant amounts of
capital. The Company believes
that the successful track record of
foreign investment established by
these companies in the petroleum
sector is an important indication
of the ability of foreign companies
to attract financing and receive
development approvals for the
construction of major projects
in Egypt.
Overview of Sukari
Concession Agreement
Through its wholly owned
subsidiary, Pharaoh Gold Mines NL
(“PGM”), the Company has entered
into a Concession Agreement with
EGSMA (now Egyptian Mineral
Resource Authority, or “EMRA”)
and the Arab Republic of Egypt
(“ARE”) granting PGM and EMRA
the right to explore, develop,
mine and sell gold and associated
minerals in specific concession
areas located in the Eastern
Desert of Egypt. The Concession
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Agreement came into effect under
Egyptian law on 13 June 1995.
In accordance with the terms of
the Concession Agreement, PGM
undertook a feasibility study to
support its application to EMRA for
a “Commercial Discovery” (within
the meaning of the Concession
Agreement) with respect to the
Sukari Project. On 9 November
2001, EMRA notified PGM that
the feasibility submission had
demonstrated that a Commercial
Discovery had been made at
the Sukari Project. As a result,
the Concession Agreement was
converted from exploration to
exploitation status and PGM,
together with EMRA, were granted
an Exploitation Lease over 160 km2
surrounding the Sukari Project site.
The Exploitation Lease was signed
by PGM, EMRA and the Egyptian
Minister of Petroleum and gives
tenure for a period of 30 years,
commencing 24 May 2005 and
extendable by PGM for an additional
30 years upon PGM providing
reasonable commercial justification.
The Exploitation Lease will lapse if
production of gold is not achieved
within five years of the signing date.
Following demonstration of a
Commercial Discovery, PGM
and EMRA were required to
establish an operating company
owned 50% by each party (the
“Operating Company”).The
Operating Company, named
Sukari Gold Mining Company,
was incorporated under the laws
of Egypt on 27 March 2006.
The Operating Company was
formed to conduct exploration,
development and exploitation in
accordance with the Concession
Agreement. The registered office
of the Operating Company is at
361 El-Horreya Road, Sedi Gaber,
Alexandria, Egypt.
The ARE is entitled to a royalty
of 3% of net sales revenue from
the sale of gold and associated
minerals from the Sukari Project,
payable in cash in each calendar
half year. Net sales revenue is
calculated by deducting from sales
revenue all shipping, insurance,
smelting and refining costs, delivery
costs not payable by customers,
all commercial discounts and
all penalties (relating to the
quality of gold and associated
minerals shipped).
Under the Concession Agreement,
PGM solely funds the Operating
Company but is entitled to recover
the following costs and expenses
payable from sales revenue
(excluding the royalty payable
to ARE):
all current operating expenses
incurred and paid after the initial
commercial production;
exploration costs, including
those accumulated to the
commencement of commercial
production (at the rate of 33.3%
per annum); and
exploitation capital costs,
including those accumulated
prior to the commencement of
commercial production (at the
rate of 33.3% per annum).
Recovery of capital costs shall
include interest on a maximum of
50% of investment borrowed from
financial institutions not affiliated
with PGM provided that PGM shall
use best efforts to obtain the most
favourable rate of interest, not
to exceed LIBOR + 1%. If costs
recoverable by PGM exceed the
sales revenue (excluding any royalty
payable to ARE) in any financial
year, the excess is carried forward
for recovery in the next financial
year or years until fully recovered,
but in no case after the termination
of the Concession Agreement.
After deduction of the royalty
payments and recoverable
expenses by PGM, the remainder of
the sales revenue from the Sukari
Project will be shared equally by
PGM and EMRA except that for
the first and second years in which
there are net proceeds for the entire
year, an additional 10% of such
proceeds will be paid to PGM as
an incentive (i.e. 60% to PGM and
40% to EMRA), and for each of the
next two years in which there are
net proceeds for the entire year, an
additional 5% of such proceeds will
be paid to PGM (i.e. 55% to PGM
and 45% to EMRA).
In addition, under the Concession
Agreement, certain tax exemptions
have been granted, including
the following:
commencing on the date of
commercial production, PGM
will be entitled to a 15 year
exemption from any taxes
imposed by the Egyptian
government. The parties intend
that the Operating Company will
in due course file an application
to extend the tax-free period for
a further 15 years. The extension
of tax-free period requires that
certain activities in remote
areas of the lands under the
Concession Area have been
programmed and agreed by
all parties;
PGM, EMRA and the Operating
Company are exempt from
custom taxes and duties with
respect to the importation of
machinery, equipment and
consumable items required
for the purpose of exploration
and mining activities at the
Sukari Project;
PGM, EMRA, the Operating
Company and their respective
buyers will be exempt from
any duties or taxes on the
export of gold and associated
minerals produced from the
Sukari Project;
PGM will at all times be free
to transfer in US dollars or
other freely convertible foreign
currency any cash of PGM
representing its share of net
proceeds and recovery of costs,
without any Egyptian government
limitation, tax or duty; and
30
PGM’s contractors and sub-
PGM commits any
Infrastructure
contractors are entitled to import
machinery, equipment and
consumable items under the
“Temporary Release System”
which provides exemption from
Egyptian customs duty.
Under the Concession Agreement,
all land in the Sukari Project shall
be the property of EMRA as soon
as it is purchased. The title to the
fixed and movable assets are to be
transferred by PGM to EMRA as
soon as their costs are recovered
by PGM, with PGM being entitled
to use all fixed and movable assets
during the term of the Exploitation
Lease and any extensions thereof.
In case of national emergency, due
to war or imminent expectation
of war or internal causes, ARE
may requisition all or part of the
production from the areas that
are the subject of the Concession
Agreement, and require the
Operating Company to increase
production to the utmost extent.
ARE may also requisition the mine
itself and, if necessary, related
facilities. In the event of any
requisition, ARE must indemnify
EMRA and PGM for the period
during which the requisition
is maintained.
ARE has the right to terminate
the Concession Agreement in the
following circumstances:
PGM has knowingly submitted
any material false statements to
the Egyptian government;
PGM assigns any interest to
any unrelated party without
the written consent of the
Egyptian government;
PGM does not comply with any
final decision reached as a result
of provisions in the Concession
Agreement with respect to
disputes and arbitration;
PGM intentionally extracts any
mineral other than gold and
associated minerals authorized
by the Concession Agreement
without the approval of the
Egyptian government; or
material breach of the
Concession Agreement.
If the Egyptian government deems
that any one of the foregoing causes
exists, the government is required to
give PGM 90 days’ notice to remedy
the defaults. If the default remains
unremedied at the expiration of
the grace period, the Egyptian
government may terminate the
Concession Agreement.
Risks and Uncertainties
The operations of the Company
are speculative due to the high
risk nature of its business which
includes the acquisition, financing,
exploration, development and
operation of mining properties.
These risk factors could materially
affect the Company’s future
operations and could cause actual
events to differ materially from
those described in forward-looking
statements relating to the Company.
Calculation of Mineralisation,
Resources and Reserves
There is a degree of uncertainty
attributable to the calculation of
mineralisation, resources and
reserves and corresponding grades
being mined or dedicated to future
production. Until reserves or
mineralisation are actually mined
and processed, the quantity of
mineralisation and reserve grades
must be considered estimates only.
In addition, the quantity of reserves
and mineralisation may vary
depending on commodity prices.
Any material change in quantity
of reserves, mineralisation, grade
or stripping ratio may affect the
economic viability of a project. In
addition, there can be no assurance
that recoveries from laboratory tests
will be duplicated in tests under on-
site conditions or during production.
Mining, processing, development
and exploration activities depend,
to one degree or another, on
adequate infrastructure. Reliable
roads, bridges and port facilities
are important determinants that
affect capital and operating
costs. Unusual or infrequent
weather phenomena, sabotage,
government or other interference
in the maintenance or provision of
such infrastructure could adversely
affect the Company’s activities
and profitability.
Title Matters
Any changes in the laws of Egypt
relating to mining could materially
affect the rights and title to
the interests held there by the
Company. No assurance can be
given that applicable governments
will not revoke or significantly alter
the conditions of the applicable
exploration and mining authorizations
nor that such exploration and mining
authorizations will not be challenged
or impugned by third parties.
Mineral Prices
Factors such as inflation, foreign
currency fluctuation, interest rates,
supply and demand and industrial
disruption have an adverse impact
on operating costs, commodity
prices and stock market prices and
on the Company’s ability to fund its
activities. The Company’s possible
revenues and share price can be
affected by these and other factors
which are beyond the control of
the Company. The market price
of minerals, including industrial
minerals, is volatile and cannot
be controlled. The Company’s
ongoing operations are influenced
by fluctuation in the world gold
price. If the price of gold or other
minerals should drop significantly,
the economic prospects of the
Company’s current project could
be significantly reduced or
rendered uneconomic. There is no
assurance that, even if commercial
quantities of ore are discovered,
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a profitable market will continue
to exist for the sale of products
from that ore. Factors beyond the
control of the Company may affect
the marketability of any minerals
discovered. Mineral prices have
fluctuated widely, particularly in
recent years. The marketability
of minerals is also affected by
numerous other factors beyond the
control of the Company, including
government regulations relating to
royalties, allowable production and
importing and exporting of minerals,
the effect of which cannot be
accurately predicted.
Funding Requirements
Mining exploration and development
involves financial risk and
capital investment. The capital
development of the Sukari Gold
Project and the continuance of
the Company’s development and
exploration activities depend upon
the Company’s ability to generate
positive cash flows, obtain financing
through the joint venturing of
projects, private and public equity
project financing, debt and/or other
means. There is no assurance that
the Company will be successful in
obtaining additional financing on a
timely basis, or at all.
Uninsured Risks
The mining business is subject
to a number of risks and hazards
including environmental hazards,
industrial accidents, labour
disputes, encountering unusual or
unexpected geologic formations or
other geological or grade problems,
encountering unanticipated ground
or water conditions, cave-ins, pit
wall failures, flooding, rock bursts,
periodic interruptions due to
inclement or hazardous weather
conditions and other acts of God.
Such risks could result in damage
to, or destruction of, mineral
properties or facilities, personal
injury or death, environmental
damage, delays in mining, monetary
losses and possible legal liability.
The Company maintains insurance
against certain risks associated
with its business in amounts that
it believes to be reasonable. Such
insurance, however, contains
exclusions and limitations on
coverage. There can be no
assurance that such insurance will
continue to be available, will be
available at economically acceptable
premiums or will be adequate to
cover any resulting claim.
Foreign operations
Operations, development and
exploration activities carried out
by the Company are or may be
affected to varying degrees by taxes
and government regulations relating
to such matters as environmental
protection, land use, water use,
health, safety, labor, restrictions
on production, price controls,
currency remittance, maintenance
of mineral rights, mineral tenure,
and expropriation of property. There
is no assurance that future changes
in taxes or such regulation in the
various jurisdictions in which the
Company operates will not adversely
affect the Company’s operations.
Industrial disruptions, work
stoppages and accidents in the
course of the Company’s operations
can result in future production
losses and delays, which may
adversely affect future profitability.
The Company’s principal asset
is held outside of Australia in
Egypt, North Africa. Although the
operating environment in Egypt is
considered favorable compared to
that in other developing countries
there are still political risks. The
risks include, but are not limited to,
terrorism, hostage taking, military
repression, expropriation, extreme
fluctuations in currency exchange
rates, high rates of inflation and
labor unrest. Changes in mining
or investment policies or shifts
in political attitudes may also
adversely affect the Company’s
business. Operations may be
affected in varying degrees by
government regulations with respect
to, but not limited to, restrictions on
production, price controls, export
controls, currency remittance,
income taxes, maintenance of
claims, environmental legislation,
expropriation of property, land
use, land claims of local people,
water use and safety. The effect
of these factors cannot be
accurately predicted.
Exploration and
Development Risks
The successful exploration and
development of mineral properties
is speculative and subject to a
number of uncertainties which
even a combination of careful
evaluation, experience and
knowledge may not eliminate.
There is no certainty that the
expenditures made or to be made
by the Company in the exploration
and development of its mineral
properties or properties in which
it has an interest will result in the
discovery of mineralized materials
in commercial quantities. Most
exploration projects do not result
in the discovery of commercially
mineable deposits. While discovery
of a base metal or precious metal
bearing structure may result in
substantial rewards, few properties
that are explored are ultimately
developed into producing mines.
Major expenses may be required
to establish reserves by drilling and
to construct mining and processing
facilities at a site. It is impossible to
ensure that exploration programmes
carried out by the Company will
result in profitable commercial
mining operations. The Company’s
operations are subject to all of
the hazards and risks normally
incident to mineral exploration, mine
development and operation, any of
which could result in damage to life
or property, environmental damage
and possible legal liability for any
or all damage. Hazards such as
unusual or unexpected formations,
pressures or other conditions may
also be encountered.
32
Environmental and other
Regulatory Requirements
Mining and
Investment Policies
Hedging and
Foreign Exchange
The current or future operations
of the Company, including
development activities and, if
warranted, commencement
of production on properties in
which it has an interest, require
permits from various governmental
authorities, and such operations are
and will be governed by laws and
regulations governing prospecting,
development, mining, production,
exports, taxes, labour standards,
occupational health and safety,
waste disposal, toxic substances,
land use, environmental protection,
mine safety and other matters.
Companies engaged in the
development and operation of
mines and related facilities generally
experience increased costs and
delays in production and other
schedules as a result of the need
to comply with applicable laws,
regulations and permits. The
Company believes it is in substantial
compliance with all material laws
and regulations that currently apply
to its activities. However, there can
be no assurance that all permits
which the Company may require for
the conduct of mineral exploration
and development can be obtained
or maintained on reasonable terms
or that such laws and regulations
would not have an adverse effect
on any such mineral exploration or
development which the Company
might undertake. Amendments
to current laws, regulations and
permits governing operations and
activities of mineral exploration
companies, or more stringent
interpretation, implementation or
enforcement thereof, could have
a material adverse impact on
the Company.
While hedging of commodity
prices and exchange rates is
possible, there is no guarantee that
appropriate hedging will be available
at an acceptable cost should the
Company choose or need to enter
into these types of transactions.
Changes in mining or investment
policies or shifts in political attitude
may adversely affect the Company’s
business. Operations may be
affected in varying degrees by
government regulations with respect
to restrictions on production,
price controls, export controls,
income taxes, expropriation of
property, maintenance of claims,
environmental legislation, land use,
land claims of local people, water
use and safety regulations. The
effect of these factors cannot be
accurately predicted.
Related Party Transactions
The related party transactions for financial year ended 30 June 2010 are
summarised below:
Mr J El-Raghy and Mr S El-Raghy are directors and shareholders of
El-Raghy Kriewaldt Pty Ltd (“El-Raghy Kriewaldt”). El-Raghy Kriewaldt
provides office premises to the Company. All dealings with El-Raghy
Kriewaldt are in the ordinary course of business and on normal terms and
conditions. Rent and office outgoings paid to El-Raghy Kriewaldt during
the year were A$66,274 (2009: A$64,475). Mr S El-Raghy retired as a
director of Centamin Egypt Limited Group on 31 December 2009.
Mr S El-Raghy provides office premises to the Company in Alexandria,
Egypt. All dealings are in the ordinary course of business and on normal
terms and conditions. Mr S El-Raghy retired as a director of Centamin
Egypt Limited Group on 31 December 2009. Rent paid for the six months
to 31 December 2009 amounted to GBP 3,900 (Full year ended 30 June
2009: GBP 7,800).
A Director of the Company, Mr C Cowden has an interest as a director and
shareholder of Cowden Limited Insurance Brokers. This company provides
insurance broking services to the Company. All dealings with this company
are in the ordinary course of business and on normal terms and conditions.
Cowden Limited was paid A$73,481 during the year (2009: A$51,977) for
these services. In addition, amounts of A$443,529 (2009: A$320,428)
were paid to Cowden Limited to be passed on to underwriters for premiums
during the year.
For further details of the related party transactions see Note 31 of the Notes
to the Financial Statements.
Subsequent Events
There were no events subsequent to balance date requiring disclosure.
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Auditor
Independence Declaration
The Board of Directors
Centamin Egypt Limited
57 Kishorn Road
MT PLEASANT WA 6153
31 August 2010
Dear Board Members
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Woodside Plaze
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
DX206
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
Centamin Egypt Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to
the directors of Centamin Egypt Limited.
As lead audit partner for the audit of the financial statements of Centamin Egypt Limited for the financial year ended 30 June 2010,
I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Ross Jerrard
Partner
Chartered Accountants
Member of Deloitte Touche Tohmatsu
Liability limited by a scheme approved under Professional Standards Legislation.
34
Corporate
Governance Statement
The Board of Directors of Centamin Egypt Limited is responsible for the corporate governance of the consolidated entity. The Board
guides and monitors the business and affairs of Centamin Egypt Limited on behalf of the shareholders by whom they are elected
and to whom they are accountable.
Unless disclosed below, the best practice recommendations of the ASX Corporate Governance Council (“ASXCGC”), the Financial
Reporting Council’s Combined Code On Corporate Governance (“Combined Code”) and the best practice recommendations of the
Toronto Stock Exchange and those prescribed under National Policy 58-201 – Corporate Governance Guidelines (“NP 58-201”)
have been applied for the entire financial year ended 30 June 2010. Since migrating to the main market of the London Stock
Exchange on 6 November 2009, the Company has also adhered to the provisions of the Model Code. Where there has been any
variation from the recommendations, those practices continue to be the subject of the scrutiny of the full Board.
Copies of the current Board and Committee Charters and Policies are available on the Company’s website www.centamin.com.
Board Composition:
The Board comprises seven Directors, of whom the Chairman, the Chief Executive Officer and the Executive Director of Operations
are the only Executive Directors. The best practice recommendations of the ASXCGC, the Combined Code on Corporate
Governance and NP 58-201 favour that the Chairman be an independent Director. However, as the Executive Chairman, Mr Josef
El-Raghy, has been primarily based in Egypt during the Company’s development, where his knowledge of the Company’s
project, the Egyptian culture and government contacts are invaluable, the Board believes that it is appropriate in the Company's
circumstances that his role and status continues to be both as an Executive and as Chairman. Major shareholders were consulted
before Mr El-Raghy transitioned from Managing Director/CEO to Chairman on 3 March 2010.
The period of office held, skills, experience and expertise relevant to the position of each Director who is in office at the date of the
annual report, their attendances at meetings and their term of office are detailed in the Directors’ Report.
The names of the Directors of the Company in office at the date of this statement are:
Name
Josef El-Raghy
Harry Michael
Trevor Schultz
Position
Chairman
Chief Executive Officer
Executive Director of Operations
Committees
-
-
-
H Stuart Bottomley
Senior Independent Non Executive Director
Colin N Cowden
Independent Non Executive Director
Thomas G Elder
Independent Non Executive Director
G Robert T Bowker
Independent Non Executive Director
Audit Committee
Compliance/Corporate Governance Committee
Audit Committee
Nomination and Remuneration Committee
Nomination and Remuneration Committee
Compliance/Corporate Governance Committee
Audit Committee
Nomination and Remuneration Committee
Compliance/Corporate Governance Committee
Josef El-Raghy, Colin Cowden and Robert Bowker are also Directors of the wholly owned subsidiary companies, Pharaoh Gold
Mines NL, Viking Resources Ltd, and North African Resources NL. Josef El-Raghy and Tom Elder are also Directors of the wholly
owned subsidiary, Centamin Limited. External Directorships of the Company’s Directors are detailed in the Directors’ Report.
Non Executive Directors have the right to seek independent professional advice in the furtherance of their duties as Directors, at
the Company’s expense. Written approval must be obtained from the Chief Executive Officer prior to incurring expenses on behalf
of the Company.
When determining whether a Director is independent, the Board has established a Directors’ Test of Independence Policy, which
is based predominantly on the definition of independence as defined in Canadian Securities Administrators’ Multilateral Instrument
52-110 (“MI 52-110”), and is available on the Company’s website or upon request. The criteria in MI 52-110 are mandatory and are
more stringent in certain respects than the independence criteria suggested by the ASXCGC or the Combined Code. Based on this
Policy, the majority of the Board are considered to be independent Non Executive Directors. The Board considers that Mr Cowden
is independent, notwithstanding his tenure on the Board would potentially be a relevant factor for determining independence under
the Combined Code. Furthermore, the Board believes that Mr Cowden's financial expertise and experience provide a valuable
contribution to the deliberations and operations of the Board and certain Committees. In addition, the Board considers that Dr Tom
Elder and Mr Stuart Bottomley are each independent, notwithstanding circumstances which may appear relevant to determining
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Corporate
Governance Statement
their independence under the Combined Code, such as their previous participation in the Company's Employee Option Plan, because
the Board believes that each of Dr Elder and Mr Bottomley still exert independent judgment when carrying out their responsibilities as
non executive directors.
The Directors are aware of the need for the composition of Board to evolve with the development of Company, and propose to revise
the composition of the Board in due course, including the possibility of appointing additional independent Non Executive Directors.
Meetings of Independent Directors:
The Board appointed Mr Stuart Bottomley as the Company’s Senior Independent Director on 26 August 2009. Mr Bottomley is
responsible for meeting with other Non Executive Directors and major shareholders on a regular basis, and chairs meetings of
the Company’s independent Directors, who meet at least once a year without the non-independent Directors and members of
management present. Although the Company has not implemented formal structures or procedures for the independent functioning
of the Board of Directors, the Board of Directors believes that it operates independently of management.
Position Descriptions:
The roles of Chairman and Chief Executive Officer are strictly separated as defined in the Company’s Board Charter, which
was revised during the year, and the Company intends to develop formal written position descriptions for the Chair of each
Board committee.
Mandate/Charter of the Board of Directors:
The Board of Directors supervises the management of the business and affairs of the Company. The Board of Directors assumes
responsibility for the stewardship of the Company, and the functions the Company has established that are reserved to the
Board include:
■■
■■
■■
■■
■■
Strategic Planning:
of Directors meetings, and otherwise as required.
The Board of Directors regularly reviews and approves strategic plans and initiatives of the Company at Board
Risk Assessment:
ensure the implementation of appropriate systems to manage these risks. See “Managing Risks” below.
The Board of Directors has primary responsibility to identify principal risks in the Company’s business and
Succession Planning:
monitoring of senior management.
The Board of Directors is responsible for succession planning, including the appointment, training and
Communications:
in the Company.
The Board of Directors oversees the Company’s public communications with shareholders and others interested
Internal Controls:
and management information systems.
The Board of Directors and the audit committee of the Board of Directors oversee the Company’s internal control
In addition to its general oversight responsibilities, significant transactions out of the ordinary course of the Company’s business or
which may be material to the Company are considered and approved by the Board of Directors. The Board of Directors generally has
at least six regularly scheduled meetings in each financial year. Additional meetings may be held depending upon opportunities or
issues to be dealt with by the Company from time to time. During the financial year ended 30 June 2010, the Board of Directors held
eight (8) meetings, and considered and passed ten (10) circular resolutions pursuant to the Company’ Constitution.
A full copy of the Company’s Board Charter is available on the Company’s website or upon request.
Orientation and Continuing Education:
The Company’s formal orientation or education program for new Directors begins with new Board members receiving an orientation
package which includes reports on operations and results, and public disclosure filings by the Company. Board meetings are
combined with presentations by the Company's management and employees to give the Directors additional insight into the
Company's business. In addition, management of the Company makes itself available for discussion with all members of the Board of
Directors. New Board members are also encouraged to broaden their skills and knowledge by undertaking continuing education.
Managing risks:
The Board meets regularly to evaluate, control, review and implement the Company’s operations and objectives.
Regular controls established by the Board include:
■■
■■
■■
timely and detailed monthly financial and operational reporting;
implementation of operating plans, cash flows and budgets by management and Board monitoring of progress against projections;
and
procedures to allow Directors, and management in the furtherance of their duties, to seek independent professional advice via the
utilisation of various external technical consultants.
36
The Board is responsible for reviewing and approving the Company’s risk management strategy, policy and key risk parameters,
including determining the Group’s appetite for country risk and major investment decisions. Management reports to the Board on
the Company’s key risks and the extent to which it believes these risks are being managed. This is performed periodically. The
Board is also responsible for satisfying itself that management has developed and implemented a sound system of risk management
and internal control. The Board has delegated oversight of the Risk Management Policy, including review of the effectiveness of the
Company’s internal control framework and risk management process to the Audit Committee, which is reviewed at least annually.
Management is responsible for designing, implementing, reviewing and providing assurance as to the effectiveness of the Policy.
This responsibility includes developing business and functional risk identification, specific risk treatment, controls, monitoring and
reporting capability. A standardized approach to risk assessment is used to ensure that risks are consistently assessed and reported
to an appropriate level. The Board regularly discusses risks associated with the Company’s business and operations along with the
Company’s risk tolerance. The Company has developed a series of operational risks which the Company believes to be inherent to
the Company. These operational risks are summarized in the Management, Discussion and Analysis section of this annual report.
Mitigation and optimization strategies are considered equally important in risk management.
The Risk Management Policy is available on the Company’s website or upon request.
Monitoring of the Board’s performance
In order to ensure that the Board continues to discharge its responsibilities in an appropriate manner, the performance of all Directors
is constantly reviewed by the Chairman. The Company did not have a formal process for evaluation of the Board, the Board members,
or Board committees during the financial year, however, a formal process has been now been established. A formal Board evaluation
questionnaire was drafted and delivered to each member of the Board for completion in August 2010. The questionnaire covered
questions on the structure of the Board, the selection of management, strategy determination, etc, as well questions on the Director’s
personal contribution to the board and the Company’s Committees. The completed questionnaires were provided to the Chairman
for review and subsequent discussion. The Company did not utilize any external search consultancy or open advertising during
this process.
Nomination and Remuneration Committee and policies:
The Nomination and Remuneration Committee comprises Dr Tom Elder (Chairman), Mr Colin Cowden and Professor Robert Bowker,
all independent Directors of the Company.
The Committee’s primary functions are to:-
(a) make recommendations to the Board on:-
i)
The Company’s remuneration, recruitment, retention, termination, superannuation and incentive policies and procedures for
Directors and senior executives;
ii) The Employee Option Plan;
iii) The development of a process for evaluation of the performance of the Board, its committees and Directors.
(b) Review the necessary and desirable competencies, skills, knowledge and experience of Directors;
(c) Review the Board succession plans; and
(d) Make recommendations for the appointment, re-election and removal of Directors to/from the Board.
The Board believes that whilst the Company has the current number of independent Non Executive Directors located in different
jurisdictions (the United Kingdom, Egypt, Switzerland and Australia), a single committee combining both nomination and
remuneration functions, rather than separate committees, is appropriate in the Company's circumstances, as this allows committee
meetings to be held in an efficient manner and on a timely basis. Such a combined committee is consistent with Australian corporate
governance practices.
The Nomination and Remuneration Committee establishes guidelines for the future nomination and selection of potential new
Directors. The full Board (subject to members voting rights in general meeting) is ultimately responsible for selection of new members
and has regard to a candidate’s experience and competence in areas such as mining, exploration, geology, finance, administration
and other areas of relevance that can assist the Company in meeting its corporate objectives and plans.
Under the Company’s current Constitution:
■■
■■
■■
the maximum number of Directors on the Board is ten;
a Director may not retain office for more than three years without submitting for re-election;
at the Annual General Meeting (AGM) each year effectively one third of the Directors in office retire by rotation and must seek re-
election by shareholders; and
■■
any Director appointed by the Board must have their election confirmed by shareholders at the next AGM.
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Corporate
Governance Statement
Non Executive Directors who have served more than nine years on the Board are subject to annual re-election at the Company’s
AGM. Where a Non Executive Director has served six years or longer on the Board, their re-election will be subject to particularly
rigorous review and will take into account the need for progressive refreshing of the Board.
The Company has established a Remuneration Policy which sets out the structure of the remuneration of key senior executives,
Executive Directors, Non Executive Directors, termination, disclosure of remuneration etc. The Board has also established a Selection,
Appointment and Re-Appointment of Directors Policy which details the procedures for the selection, appointment, re-appointment
and evaluation of the Company’s Directors. The Committee considers both policies before making recommendations to the Board on
nomination and remuneration matters. Both Policies, along with the Nomination and Remuneration Committee Charter are available
on the Company’s website or upon request.
All compensation arrangements for Directors and senior executives are determined by the Committee and approved by the Board,
after taking into account the current competitive arrangements prevailing in the market. This approach is consistent with the practices
of other Australian companies.
The amount of remuneration for all Directors including the full remuneration packages, comprising all monetary and non-monetary
components of the Executive Directors and executives, are detailed in the Directors’ Report. Non Executive Directors receive annual
fees within an aggregate Directors’ fee pool limited to an amount which is approved by shareholders. The Board Nomination and
Remuneration Committee reviews and recommends, for Board approval, remuneration levels and policies for Directors within this
overall Directors’ fee pool. The fees which are paid are also periodically reviewed. The current annual fee for Non Executive Directors
is a base fee of A$40,000 per annum. Due to the additional time required, the Chairperson of the Board’s various Committees
receives an additional fee (currently A$10,000) for Chairing that Committee, and the members of each committee also receive an
additional fee (currently A$5,000) for being a Committee member. These amounts include any statutory superannuation payments
where applicable. The exception to this is Professor Bowker who is paid A$100,000 pa (including superannuation and committee
fees), due to the additional time required to attend meetings on behalf of, or in connection with, the Company in the Middle East.
Although no formal written policy has been established, the senior executives are responsible for:-
■■
■■
■■
■■
■■
developing corporate strategy, performance objectives, business plans, budgets etc for review and approval by the Board;
managing the day to day business of the Company;
managing the risk and compliance frameworks including reporting to the Board and, where necessary, the market;
appointing staff, evaluating their performance and training requirements as well as development of Company policies; and
ensuring all available information in connection with items to be discussed at a meeting of the Board is provided to each Director
prior to the meeting.
The Chief Executive Officer is responsible for ensuring senior executives properly discharge the responsibilities delegated and for
keeping the Board informed on these matters.
The performance of senior executives is evaluated by the Nomination and Remuneration Committee, often taking into account
recommendations from the Chief Executive Officer and/or Chairman. The Board can exercise its discretion in relation to approving
incentives, bonuses and options and can recommend changes to the Committee’s recommendations. All executives receive
base salary and superannuation (if applicable) and in some cases, performance incentives and fringe benefits. These packages
are reviewed on an annual basis. All remuneration paid to executives is valued at the cost to the Company and is measured in
accordance with the applicable accounting standards.
The performance of our senior executives was evaluated in the current year by the Nomination and Remuneration Committee. The
Committee reviewed recommendations received from the Chairman, considered the performance of the senior executive, his/her
current contract, and whether a bonus and/or the grant of employee options was warranted. During the financial year, the Board
believed it to be appropriate to base performance on how well the executive performs his/her role, and not necessarily base it on the
Company meeting financial objectives. The Company is, however, in the process of setting performance targets for senior executives.
Directors, executives and employees, are from time to time invited to participate in the shareholder approved Employee Option Plan.
Separate shareholder approval is sought before any Director can be issued options. Shares issued are valued as the difference
between the market price of those shares and the amount paid by the Executive. Options are valued using the Black-Scholes
methodology. Non Executive Directors have long been encouraged by the Board to hold shares in the Company to align their interests
more closely to those of the Company's shareholders.
The Board expects that the remuneration structure that is implemented will result in the Company being able to attract and retain
the best executives to manage the economic entity. It will also provide the Executives with the necessary incentives to work to grow
long-term shareholder value. Please refer to the Remuneration Report which forms part of the Directors’ Report for information on
remuneration paid to Directors and executives during the financial year.
There are no schemes for retirement benefits other than statutory superannuation for Non Executive Directors.
38
Compliance / Corporate Governance Committee:
The Compliance / Corporate Governance Committee comprises Mr Stuart Bottomley (Chairman), Professor Robert Bowker and
Dr Tom Elder, all independent Directors of the Company.
The Committee assists the Board in fulfilling its fiduciary responsibilities by making recommendations to the Board with respect
to the formulation or re-formulation of and implementation, maintenance and monitoring of the Company’s Corporate Compliance
Program and Code of Conduct as may be modified, supplemented or replaced from time to time, designed to ensure compliance
with corporate governance policies and legal rules and regulations. Fundamental to the Company’s corporate governance policy
and practice is that all Directors and employees reflect the Company’s key values of accountability, fairness, integrity and openness.
The Committee oversees the Company's activities in the area of corporate compliance that may impact the Company's business
operations or public image, in light of applicable government and industry standards, legal and business trends and public policy
issues. It will pay particular attention to health and safety, environmental, archaeological and social responsibility issues addressed by
the Company.
The Compliance / Corporate Governance Committee is currently reviewing the recent changes to The UK Corporate Governance Code.
Audit Committee:
The Audit Committee comprises Mr Colin Cowden (Chairman), Mr Stuart Bottomley and Professor Robert Bowker, all independent
Directors of the Company.
The Company has a duly constituted Audit Committee which comprises two Australian based independent Directors and one
Swiss (previously UK) resident Director whose names, qualifications and attendances are included in the Directors’ Report. The
responsibilities of the Audit Committee are laid out in its charter, and amongst other things, includes the responsibility to ensure that
an effective internal control framework exists within the entity, and to review quarterly, half yearly and annual financial statements
for submission to the Board for approval. The Committee receives regular reports from management and external auditors on
accounting and internal control matters. This includes the safeguarding of assets, the maintenance of proper accounting records,
the need for an internal audit function and the reliability of financial information as well as non-financial considerations. The Audit
Committee will also recommend the appointment, and will review the fees, of external auditors. The Committee and the Board
reviewed the need for an internal audit function during the year and resolved not to implement an internal audit function at the time,
being that the Company has a single operation in one country.
A copy of the Audit Committee Charter is available on the Company’s website or upon request.
External auditors:
The auditors of the Company, Deloitte Touche Tohmatsu (“Deloitte”), have open access to the Board of Directors at all times. Deloitte
have audited the Company and its subsidiaries for a number of years and have adopted a policy of rotating audit partners every five
years. The last rotation of the audit partner occurred during the previous financial year.
Deloitte do attend the Company’s Annual General Meeting and it is consistent with their current business practice, and is in
accordance with s250RA of the Corporations Act 2001.
Securities Trading Policy:
The Company has adopted a formal Securities Trading Policy restricting Directors, senior executives and employees from acting on
material information until it has been released to the market in accordance with the requirements of continuous disclosure. Directors
and senior management of LSE listed companies are restricted in a number of ways, by statute, common law and by the Model Code
to deal in the Company’s securities. This rule imposes restrictions beyond those imposed by law in that the Directors and certain
employees and persons connected with them do not abuse and do not place themselves under suspicion of abusing price-sensitive
information that they have or are thought to have, especially in periods leading up to announcement of results (close periods). The
Company’s Securities Trading Policy is available on the Company’s website or upon request.
Commitment to stakeholders & ethical standards:
The Board supports the highest standards of corporate governance and requires its members and the management and staff of the
Company to act with integrity and objectivity in relation to:
■■
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■■
■■
■■
Compliance with laws and regulations affecting the Company’s operations;
Listing rules, the Combined Code On Corporate Governance, and NP 58-201;
Employment practices;
Responsibilities to the community;
Responsibilities to the individual;
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■■
■■
■■
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The environment;
Conflict of interests;
Confidentiality;
Ensure that shareholders and the financial community are at all times fully informed in accordance with the spirit and letter of the
Model Code and the Canadian Securities Administrators’ National Instrument 51-102;
Corporate opportunities or opportunities arising from these for personal gain or to compete with the Company;
Protection of and proper use of the Company’s assets; and
Active promotion of ethical behaviour.
The Company has a formal Code of Conduct, which all Directors, employees and contractors are required to observe, and a range
of corporate policies which detail the framework for acceptable corporate behaviour. These set out the procedures that personnel
are required to follow in a range of areas, including compliance with the law, dealing with conflicts of interest, use of knowledge and
information, gifts and entertainment, responsibility to shareholders and the financial community etc. The Company’s policies are
reviewed periodically.
A copy of the Code of Conduct is available on the Company’s website or upon request.
Communication to shareholders:
The Board of Directors aims to ensure that shareholders are provided with important information in a timely manner through written
and electronic communications. It is for this reason that the Company established a Shareholder Communications Policy during the
previous year.
The Board of Directors aims to ensure that the shareholders, on behalf of whom they act, are informed of all information necessary to
assess the performance of the Company. Information is communicated to the shareholders through:
■■
■■
■■
■■
■■
■■
■■
the Annual Report;
the Annual Information Form;
the availability of the Company’s Quarterly Report, Half-Yearly Report and other announcements distributed to shareholders
so requesting;
adherence to continuous disclosure requirements;
webcasts of the Company’s quarterly results;
the Annual General Meeting and other meetings called to obtain shareholder approval for Board action as appropriate; and
the provision of the Company's website containing all of the above mentioned reports and its constant update and maintenance.
The Chairman, CEO and other Directors, communicate with major shareholders on a regular basis in the way of face to face contact,
telephone conversations, and analyst and broker briefings, to help better understand the views of the shareholders. Any material
feedback is then discussed at Board level.
The Board recognises the importance of keeping the market fully informed of the Company’s activities and of communicating openly
and clearly with all stakeholders. The Company established a formal Continuous Disclosure Policy during the previous year to ensure
that this occurs. The Policy is designed to ensure compliance with the listing rules in all jurisdictions in which the Company is listed. A
copy of this Policy is available on the Company’s website or by request.
In accordance with the Policy, Company information considered to be material is announced immediately to the LSE and TSX. All key
communications are placed immediately on the Company website, and when necessary, provided directly to shareholders. As part of
the move to the Main Market of the London Stock Exchange, the Company now complies with the various obligations imposed on it
pursuant to the Disclosure Rules and the Transparency Rules (“DTRs”).
Statement by the Chief Executive Officer and Chief Financial Officer
The Board receives written assurance from the Chief Executive Officer and Chief Financial Officer to confirm that to the best of their
knowledge and belief, the group’s financial position presents a true and fair view and that the financial statements are founded on a
sound system of risk management, internal compliance and control. Further, it is confirmed that the group’s risk management and
internal compliance is operating efficiently and effectively. The Board notes that due to its nature, internal control assurance from the
Chief Financial Officer and Chief Financial Officer can only be reasonable rather than absolute, and therefore is not and cannot be
designed to detect all weaknesses in control procedures.
40
Independent
Auditor’s Report
Independent Auditor’s Report
to the Directors of Centamin Egypt Limited
Report on the Financial Report
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
DX 206
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
We have audited the accompanying financial report of Centamin Egypt Limited, which comprises the statement of
financial position as at 30 June 2010, and the statement of comprehensive income, the statement of cash flows and the
statement of changes in equity for the year ended on that date, notes comprising a summary of significant accounting
policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the
company and the entities it controlled at the year’s end or from time to time during the financial year as set out on pages
43 to 80.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial report in
accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the
preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or
error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in
the circumstances. In Note 3, the directors also state, in accordance with Accounting Standard AASB 101 Presentation
of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards
ensures that the financial report, comprising the financial statements and notes, complies with International Financial
Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the
financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Member of Deloitte Touche Tohmatsu
Liability limited by a scheme approved under Professional Standards Legislation.
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Independent
Auditor’s Report
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s Opinion
In our opinion:
(a) the financial report of Centamin Egypt Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2010 and of their
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 3.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 17 to 20 of the directors’ report for the year ended 30 June 2010. The
directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section
300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion the Remuneration Report of Centamin Egypt Limited for the year ended 30 June 2010, complies with section 300A of
the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
Ross Jerrard
Partner
Chartered Accountants
Perth, 31 August 2010
42
Directors’
Declaration
The Directors declare that:
a)
b)
in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable;
in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001,
including compliance with accounting standards and giving a true and fair view of the financial position and performance of the
Company and the consolidated entity; and
c)
In the Directors’ opinion, the financial statements and notes thereto are in accordance with International Financial Reporting
Standards issued by the International Accounting Standards Board, as stated in note 3;
d)
the Directors’ have been given the declarations required by s.295A of the Corporations Act 2001.
At the date of this declaration, the Company is within the class of companies affected by ASIC Class Order 98/1418. The nature of the
deed of cross guarantee is such that each company which is party to the deed guarantees to each creditor payment in full of any debt
in accordance with the deed of cross guarantee. In the directors’ opinion, there are reasonable grounds to believe that the Company
and the companies to which the ASIC Class Order applies, as detailed in Note 22 to the financial statements will, as a group, be able
to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee.
Signed in accordance with a resolution of the Directors made pursuant to s. 295(5) of the Corporations Act 2001.
On behalf of the Directors
Mr Colin Cowden
Director
Perth, 31 August 2010
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Statement of Comprehensive Income
for the financial year ended 30 June 2010
Consolidated
Company
Note
2010
$US’000
2009
$US’000
2010
$US’000
2009
$US’000
Revenue
Cost of Sales
Other revenue
Production royalty
Foreign exchange gain / (loss)
Administrative expenses
Depreciation and amortisation expense
Share based payments
Profit / (Loss) before tax
Income tax income/(expense)
Net Profit / (Loss) for the year
5
6
5
6
6
6
6
6
7
Other Comprehensive Income
Other Comprehensive Income (net of tax)
Other Comprehensive Income for the period
-
-
37,710
(3,547)
34,163
888
(2,205)
3,614
(5,813)
(11,897)
(1,722)
17,028
(4,158)
12,870
-
-
-
-
-
-
-
2,893
2,893
12
(19,284)
(2,142)
(544)
(3,206)
(22,271)
544
544
-
-
4,523
(4,735)
(11)
(1,722)
(1,401)
169
(3,959)
2,591
2,591
8
(18,722)
(1,857)
(22)
(3,206)
(21,208)
18
(22,102)
(5,360)
(21,190)
-
-
-
-
Total Comprehensive Income
12,870
(22,102)
(5,360)
(21,190)
Earnings / (Loss)Per Share:
Basic (cents per share)
Diluted (cents per share)
25
25
1.26
1.26
(2.40)
(2.40)
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes on pages 49 to 80.
44
Statement of Financial position
as at 30 June 2010
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Total current assets
NON-CURRENT ASSETS
Trade and other receivables
Property, plant and equipment
Other financial assets
Deferred tax assets
Exploration, evaluation and development
Total non-current assets
Total assets
CURRENT LIABILITIES
Trade and other payables
Current tax liabilities
Provisions
Total current liabilities
NON-CURRENT LIABILITIES
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Accumulated losses
Total equity
-
-
-
Note
26(a)
9
10
11
9
12
13
7
14
15
7
16
16
17
18
Consolidated
Company
2010
$US’000
2009
$US’000
2010
$US’000
2009
$US’000
-
-
31,326
3,316
21,861
268
56,771
283,072
138,525
421,597
478,368
22,204
444
556
23,204
2,622
2,622
25,826
452,542
465,096
4,237
(16,791)
452,542
68,609
30
3,780
945
73,364
-
-
59,879
4,104
-
269,075
333,058
406,422
7,454
444
606
8,504
14,883
5
58,747
14
-
-
14,888
58,761
423,759
11
4,502
302
428,574
443,462
312
489
144
945
337,604
18
4,502
3,904
302
346,330
405,091
145
489
70
704
1,736
1,736
-
-
-
-
10,240
396,182
416,886
8,957
(29,661)
396,182
945
704
442,517
404,387
465,096
4,727
(27,306)
442,517
416,886
9,447
(21,946)
404,387
The above Statement of Financial Position should be read in conjunction with the notes on pages 49 to 80.
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Statement of Changes in equity
for the financial year ended 30 June 2010
Consolidated 2010
Fully Paid
Ordinary Shares
$US’000
Other
Reserves
$US’000
Share Options
Reserve
$US’000
Accumulated
Losses
$US’000
Balance as at 30 June 2009
416,886
2,295
6,662
-
Profit for the year
Total Comprehensive income for
-
the period
Recognition of share based payments -
Transfer from share options reserve
Issues of shares under ESOP*
Issues of shares
Share issue costs
Tax effect of current period share
issue costs
Balance as at 30 June 2010
-
-
-
-
-
-
-
-
6,442
16,262
27,023
(1,572)
55
465,096
(29,661)
12,870
12,870
-
-
-
-
-
-
-
1,722
(6,442)
-
-
-
-
-
-
2,295
1,942
(16,791)
452,542
Consolidated 2009
Fully Paid
Ordinary Shares
$US’000
Other
Reserves
$US’000
Share Options
Reserve
$US’000
Accumulated
Losses
$US’000
Total
$US’000
Balance as at 30 June 2008
352,948
2,295
5,273
-
Loss for the year
Total Comprehensive income for the
-
period
Recognition of share based payments -
Transfer from share options reserve
Issues of shares under ESOP*
Issues of shares
Share issue costs
Tax effect of prior and current period
share issue costs
Balance as at 30 June 2009
-
-
-
-
-
-
-
-
1,817
1,278
60,127
(3,219)
3,935
416,886
(7,559)
(22,102)
(22,102)
-
-
-
-
-
-
-
3,206
(1,817)
-
-
-
-
-
-
2,295
6,662
(29,661)
* Employee share option plan
The above Statement of Changes in Equity should be read in conjunction with the notes on pages 49 to 80.
46
Total
$US’000
396,182
12,870
12,870
1,722
16,262
27,023
(1,572)
55
352,957
(22,102)
(22,102)
3,206
1,278
60,127
(3,219)
3,935
396,182
Company 2010
Fully Paid
Ordinary Shares
$US’000
Other
Reserves
$US’000
Share Options
Reserve
$US’000
Accumulated
Losses
$US’000
Balance as at 30 June 2009
416,886
2,785
6,662
-
-
-
Loss for the year
Total Comprehensive income for the
period
Recognition of share based
payments
Transfer from share options reserve
Issues of shares under ESOP*
Issues of shares
Share issue costs
Tax effect of current period share
issue costs
Balance as at 30 June 2010
-
-
-
-
-
-
-
-
6,442
16,262
27,023
(1,572)
55
465,096
-
-
-
Loss for the year
Total Comprehensive income for the
period
Recognition of share based
payments
Transfer from share options reserve
Issues of shares under ESOP*
Issues of shares
Share issue costs
Tax effect of prior and current
period share issue costs
Balance as at 30 June 2009
-
-
-
-
-
-
-
-
1,817
1,278
60,127
(3,219)
3,935
416,886
2,785
1,942
(27,306)
442,517
Total
$US’000
404,387
(5,360)
(21,946)
(5,360)
1,722
(6,442)
-
-
-
-
-
-
(5,360)
(5,360)
-
1,722
16,262
27,023
(1,572)
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Total
$US’000
360,250
(21,190)
(756)
(21,190)
(21,190)
(21,190)
-
3,206
1,278
60,127
(3,219)
3,935
3,206
(1,817)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,785
6,662
(21,946)
404,387
Company 2009
Fully Paid
Ordinary Shares
$US’000
Other
Reserves
$US’000
Share Options
Reserve
$US’000
Accumulated
Losses
$US’000
Balance as at 30 June 2008
352,948
2,785
5,273
* Employee share option plan
The above Statement of Changes in Equity should be read in conjunction with the notes on pages 49 to 80.
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Statement of Cash Flows
for the financial year ended 30 June 2010
Consolidated
Company
Note
2010
$US’000
2009
$US’000
2010
$US’000
2009
$US’000
Cash flows from operating activities
Receipts from customers
Interest received
Other income
Payments to suppliers and employees
Net cash generated by/ (used in) operating
activities
Cash flows from investing activities
Payment for plant and equipment
Payments for exploration & evaluation
Proceeds from the sale of plant and equipment
Advances to subsidiaries
Payments for mine development
Proceeds from gold sales (pre-production)
Net cash used in investing activities
Cash flows from financing activities
Proceeds from the issue of equity and
conversion of options
Share issue costs
Net cash provided by financing activities
-
34,282
583
123
(13,110)
2,893
12
(997)
26(b)
21,878
1,908
-
(23,219)
(12,015)
3,900
(109,101)
36,469
(103,966)
-
-
-
(30,026)
(10,463)
(139,485)
-
-
-
-
-
-
544
(4,485)
2,591
8
(1,705)
(3,941)
894
(2)
(9)
(160,698)
(4)
1
(84,001)
-
-
-
(179,974)
(84,004)
(160,709)
43,340
(1,572)
41,768
61,405
(3,219)
58,186
43,340
(1,572)
41,768
61,405
(3,219)
58,186
Net decrease in cash and cash equivalents
(40,320)
(119,880)
(46,177)
(101,629)
Cash and cash equivalents at the beginning of
the financial year
Effect of exchange rate changes on the balance
of cash held in foreign currencies
Cash and cash equivalents at the end of the
financial year
68,609
182,329
58,747
154,198
3,037
6,160
2,313
6,178
26(a)
31,326
68,609
14,883
58,747
The above Statement of Cash Flows should be read in conjunction with the notes on pages 49 to 80.
48
Notes to the Financial Statements
for the financial year ended 30 June 2010
1. General information
Centamin Egypt Limited (the Company) is a listed public company, incorporated in Australia and operating in Egypt.
Registered Office
57 Kishorn Road
Mount Pleasant WA 6153
Australia
Tel: + 61 8 9316 2640
Principal Place of Business
361 El-Horreya Road
Sedi Gaber
Alexandria, Egypt
Tel: + 203 5411 259
2. Adoption of new and revised accounting standards
In the current year, the Company and Group has adopted all of the new and revised Standards and Interpretations issued
by the Australian Accounting Standards Board (“AASB”) that are relevant to its operations and effective for annual reporting
periods beginning on or after 1 July 2009. The adoption of these new and revised Standards and Interpretations has resulted in
some disclosure changes being made.
At the date of authorisation of the financial report, the following Standards and Interpretations were in issue but not
yet effective.
Initial application of the following Standards will not affect any of the amounts recognised in the financial report, but will change
the disclosures presently made in relation to the Group and Company’s financial report:
Standard / Interpretation
AASB 9 Financial Instruments, AASB 2009-11 Amendments
to Australian Accounting Standards arising from AASB 9.
AASB 9 introduces new requirements for classifying and
measuring financial assets.
Effective for annual
reporting periods
beginning on or after:
Expected to be initially
applied in the financial
year ending:
1 January 2013
30 June 2014
Initial application of the following Standards is not expected to have any material impact on the financial report of the Group
and the Company:
Effective for annual
reporting periods
beginning on or after:
Expected to be initially
applied in the financial
year ending:
1 January 2011
30 June 2011
1 January 2010
30 June 2011
1 January 2010
30 June 2011
Standard / Interpretation
AASB 124 Related Party Disclosures (2009), AASB 2009-12
Amendments to Australian Accounting Standards Amends
the requirements of the previous version of AASB 124.
AASB 2009-5 ‘Further Amendments to Australian Accounting
Standards arising from the Annual Improvements Process’.
AASB 2009-8 Amendments to Australian Accounting
Standards - Group Cash-Settled Share-based Payment
Transactions Amends AASB 2 Share-based Payment to
clarify the accounting for group cash-settled share-based
payment transactions. An entity receiving goods or services
in a share-based payment arrangement must account
for those goods or services no matter which entity in the
group settles the transaction, and no matter whether the
transaction is settled in shares or cash.
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Notes to the Financial Statements
for the financial year ended 30 June 2010
Effective for annual
reporting periods
beginning on or after:
Expected to be initially
applied in the financial
year ending:
1 February 2010
30 June 2011
1 July 2010
30 June 2011
1 January 2011
30 June 2011
1 July 2010
30 June 2011
Standard / Interpretation
AASB 2009-10 Amendments to Australian Accounting Standards
- Classification of Rights Issues Amends AASB 132 Financial
Instruments: Presentation to require a financial instrument
that gives the holder the right to acquire a fixed number of
the entity's own equity instruments for a fixed amount of any
currency to be classified as an equity instrument if, and only
if, the entity offers the financial instrument pro rata to all of
its existing owners of the same class of its own non-derivative
equity instruments. Prior to this amendment, rights issues
(rights, options, or warrants) denominated in a currency other
than the functional currency of the issuer were accounted for as
derivative instruments.
AASB 2010-3 Amendments to Australian Accounting Standards
arising from the Annual Improvements Project Amends a
number of pronouncements as a result of the IASB's 2008-2010
cycle of annual improvements to provide clarification of
certain matters.
AASB 2010-4 Further Amendments to Australian Accounting
Standards arising from the Annual Improvements Project
Amends a number of pronouncements as a result of the IASB's
2008-2010 cycle of annual improvements.
AASB Interpretation 19 Extinguishing Liabilities with Equity
Instruments Requires the extinguishment of a financial liability
by the issue of equity instruments to be measured at fair value
(preferably using the fair value of the equity instruments issued)
with the difference between the fair value of the instrument
issued and the carrying value of the liability extinguished
being recognised in profit or loss. The Interpretation does not
apply where the conversion terms were included in the original
contract (such as in the case of convertible debt) or to common
control transactions.
3. Summary of significant accounting policies
Statement of Compliance
The financial report is a general purpose financial report which has been prepared in accordance with the Corporations
Act 2001, Accounting Standards and Interpretations, and complies with other requirements of the law. The financial report
includes the separate financial statements of the company and the consolidated financial statements of the Group. Accounting
Standards include Australian equivalents to International Financial Reporting Standards (‘A-IFRS’). Compliance with A-IFRS
ensures that the financial statements and notes of the company and the Group comply with International Financial Reporting
Standards (‘IFRS’).
The financial statements were authorised for issue by the directors on 31 August 2010.
(A) BASIS OF PREPARATION
This financial report is denominated in United States Dollars, which is the functional currency of Centamin Egypt Limited.
The Company is a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class
Order, all financial information presented in United States Dollars has been rounded to the nearest thousand dollars, unless
otherwise stated.
The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets
and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets.
50
In the application of A-IFRS management is required to make judgments, estimates and assumptions about carrying values of
assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based
on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of
which form the basis of making the judgments. Actual results may differ from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision
affects both current and future periods.
Judgments made by management in the application of A-IFRS that have significant effects on the financial statements and
estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to
the financial statements.
Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies
the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events
is reported.
The following significant policies have been adopted in the preparation and presentation of the financial report:
(B) CASH AND CASH EQUIVALENTS
Cash comprises cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
(C) FINANCIAL INSTRUMENTS ISSUED BY THE COMPANY
Debt and Equity Instruments
Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual
arrangement. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting
all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial
liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on
an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.
(D) EMPLOYEE BENEFITS
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave
and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.
Liabilities recognised in respect of employee benefits expected to be settled within 12 months, are measured at their nominal
values using the remuneration rate expected to apply at the time of settlement. Liabilities recognised in respect of employee
benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash
flows to be made by the consolidated entity in respect of services provided by employees up to reporting date.
Superannuation
The Company contributes to, but does not participate in, compulsory superannuation funds on behalf of the Employees and
Directors in respect of salaries and directors’ fees paid. Contributions are charged against income as they are made.
(E) EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
Exploration and evaluation expenditures in relation to each separate area of interest, are recognised as an exploration and
evaluation asset in the year in which they are incurred where the following conditions are satisfied:
i) the rights to tenure of the area of interest are current; and
ii) at least one of the following conditions is also met:
a) the exploration and evaluation expenditures are expected to be recouped through successful development and
exploration of the area of interest, or alternatively, by its sale; or
b) exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits
a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant
operations in, or in relation to, the area of interest are continuing.
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Notes to the Financial Statements
for the financial year ended 30 June 2010
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies,
exploration drilling, trenching and sampling and associated activities. General and administrative costs are only included in the
measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area
of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances (as defined in AASB 6
“Exploration for and Evaluation of Mineral Resources”) suggest that the carrying amount of exploration and evaluation assets
may exceed its recoverable amount. The recoverable amount of the exploration and evaluation assets (or the cash-generating
unit(s) to which it has been allocated, being no larger than the relevant area of interest) is estimated to determine the extent of
the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to
the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years.
Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration
and evaluation asset is tested for impairment, reclassified to development properties, and then amortised over the life of the
reserves associated with the area of interest once mining operations have commenced.
Development expenditure is recognised at cost less accumulated amortisation and any impairment losses. When commercial
production in an area of interest has commenced, the associated costs are amortised over the estimated economic life of the
mine on a units of production basis.
Changes in factors such as estimates of proved and probable reserves that affect unit-of-production calculations are dealt with
on a prospective basis.
(F) FINANCIAL ASSETS
Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract
whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially
measured at fair value, net of transaction costs except for those financial assets classified as at fair value through the profit or
loss which are initially measured at fair value.
Subsequent to initial recognition, investments in subsidiaries are measured at cost in the company financial statements. Other
financial assets are as ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and
is determined at the time of initial recognition.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income
over the relevant period. The effective interest rate is the rate that exactly discounts estimate future cash receipts through the
expected life of the financial asset, or, where appropriate, a shorter period.
Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active
market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective
interest rate method less impairment.
Interest is recognised by applying the effective interest rate.
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each
Statement of Financial Position date. Financial assets are impaired where there is objective evidence that as a result of one or
more events that occurred after the initial recognition of the financial asset the estimated future cash flows of the investment
have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the
asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception
of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is
uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited
against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment
at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not
been recognised.
52
In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss is recognised
directly in equity.
(G) FOREIGN CURRENCY
The individual financial statements of each group entity are presented in its functional currency being the currency of the
primary economic environment in which the entity operates. For the purpose of the consolidated financial statements, the
results and financial position of each entity are expressed in United States dollars, which is the functional currency of Centamin
Egypt Limited and the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional
currency are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance date, monetary
items denominated in foreign currencies are retranslated at the rates prevailing at the balance date. Non-monetary items
carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the
fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not
retranslated. Exchange differences are recognised in profit or loss in the period in which they arise.
(H) GOODS AND SERVICES TAX
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
i. Where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense; or
ii. For receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
Cash flows are included in the Statement of Cash Flows on a gross basis. The GST component of cash flows arising from investing
and financing activities which is recoverable from, or payable to, the taxation authority is classified as operation cash flows.
(I)
IMPAIRMENT OF ASSETS (OTHER THAN EXPLORATION AND EVALUATION AND FINANCIAL ASSETS)
At each reporting date, the consolidated entity reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset
does not generate cash flows that are independent from other assets, the consolidated entity estimates the recoverable amount
of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessment of the
time value of money and the risks specific to the asset for which the estimates of future flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its recoverable amount. Each cash generated unit is determined on an
area of interest basis.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognised for the asset (cash generating
unit) in prior years.
(J)
INVENTORIES
Inventories are valued at the lower of cost and net realisable value. Costs including an appropriate portion of fixed and variable
overhead expenses, are assigned to inventory on hand by the method appropriate to each particular class of inventory, with
the majority being valued on a weighted average cost basis. Net realisable value represents the estimated selling price less all
estimated costs of completion and costs necessary to make the sale.
Ore stockpiles, gold in circuit and bullion are valued applying absorption costing.
(K)
JOINT VENTURE ARRANGEMENTS
Jointly controlled operations
Where the Group is a venturer (and so has joint control) in a jointly controlled operation, the Group recognises the assets that it
controls and the liabilities that it incurs, along with the expenses that it incurs and the Group’s share of the income that it earns
from the sale of goods or services by the joint venture.
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Notes to the Financial Statements
for the financial year ended 30 June 2010
(L) LEASED ASSETS
Leased assets are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards
incidental to ownership of the leased asset to the lessee. All other leases are classified as operating leases.
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where other
systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
(M) PLANT AND EQUIPMENT
Plant and equipment is stated at cost less accumulated depreciation and impairment. Plant and equipment will include
capitalised development expenditure. Cost includes expenditure that is directly attributable to the acquisition of the item as well
as the estimated cost of abandonment. In the event that settlement of all or part of the purchase consideration is deferred, cost
is determined by discounting the amounts payable in the future to their present value as at the date of acquisition.
Depreciation is provided on plant and equipment. Fixed assets are calculated on a straight line basis so as to write off the net
cost or other re-valued amount of each asset over its expected useful life to its estimated residual value.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period,
with the affect of any changes recognised on a prospective basis.
The following estimated useful lives are used in the calculation of depreciation:
Plant & Equipment & Office Equipment
Motor Vehicles
Land & Buildings
- 4 - 10 years
- 2 - 8 years
- 4 - 20 years
(N) MINE DEVELOPMENT PROPERTIES
Where mining of a mineral resource has commenced, the accumulated costs are transferred to mine properties.
Amortisation is first charged to new mine development ventures from the date of first commercial production. Amortisation of
mine properties is on a unit of production basis resulting in an amortisation charge proportional to the depletion of the proved
and probable ore reserves. The unit of production can be on a tonnes or an ounce depleted basis.
(O) REVENUE
Revenue is measured at the fair value of the consideration received or receivable.
Sale of goods
Revenue from the sale of mineral production is recognised when the Consolidated Entity has passed the risks and rewards of
the mineral production to the buyer.
Pre-production revenues
Income derived by the entity prior to the date of commercial production (being 1 April 2010) has been offset against the
expenditure capitalised and carried in the Statement of Financial Position. All revenues recognised post 1 April 2010 have
been recognised in accordance with the revenue policy stated above. 1 April 2010 was selected as the commencement date of
commercial production due to the fact that sufficient, stable and sustained production capacity had been achieved as at that date.
Production royalty
The Arab Republic of Egypt (“ARE”) is entitled to a royalty of 3% of net sales revenue from the sale of gold and associated
minerals from the Sukari Project. This royalty is calculated and recognised on receipt of the final certificate of analysis
document received from the refinery. Due to its nature, the royalty is independent of, and not classified as, a cost of sales.
Interest revenue
Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
asset to that asset’s net carrying amount.
(P) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements are prepared by combining the financial statements of all the entities that comprise
the consolidated entity, being the company (the parent entity) and its subsidiaries as defined in Accounting Standard AASB
127 “Consolidated and Separate Financial Statements”. Consistent accounting policies are employed in the preparation and
presentation of the consolidated financial statements.
54
The consolidated financial statements include the information and results of each subsidiary from the date on which the
company obtains control and until such time as the company ceases to control such entity. Control is achieved where the
Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
In preparing the consolidated financial statements, all intercompany balances and transactions, and unrealised profits arising
within the consolidated entity are eliminated in full.
(Q) SHARE-BASED PAYMENTS
Equity-settled share-based payments with employees and others providing similar services are measured at the fair value of the
equity instrument at grant date. Fair value is measured by the use of the Black and Scholes model. The fair value determined
at the grant date of the equity-settled share-based payments is expensed over the vesting period, based on the consolidated
entity’s estimate of shares that will eventually vest.
Equity-settled share based transactions with other parties are measured at the fair value of the goods or services received,
except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity
instruments granted, measured at the date the entity obtains the goods or the counter party renders the service.
The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-
transferability, exercise restrictions, and behavioural considerations. Further details on how the fair value of equity-settled
share-based transactions has been determined can be found in Notes 28 and 29. At each reporting date, the Group revises
its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any,
is recognised in profit or loss over the remaining vesting period, with corresponding adjustment to the equity-settled employee
benefits reserve.
(R) TAXATION
Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit
or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by
reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid
(or refundable).
Deferred tax
Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences
arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding
tax base of those items.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to
the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences
or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the
temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a
business combination) which affects neither taxable income nor accounting profit.
Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the
company/consolidated entity intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the Statement of Comprehensive Income, except when
it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity,
or where it arises from the initial accounting for a business combination, in which case it is taken into account in the
determination of goodwill or excess.
Tax Consolidation
The Company and all its wholly-owned Australian resident entities are part of a tax-consolidated group under Australian taxation
law. Centamin Egypt Limited is the head entity in the tax-consolidated group. Tax expense/income, deferred tax liabilities
and deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in
the separate financial statements of the members of the tax-consolidated group using the “separate taxpayer within group”
approach. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and tax credits of the
members of the tax-consolidated group are recognised by the company (as the head entity in the tax-consolidated group).
0
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Notes to the Financial Statements
for the financial year ended 30 June 2010
Due to the existence of a tax funding arrangement between the entities in the tax-consolidated group, amounts are recognised
as payable to or receivable by the company and each member of the group in relation to the tax contribution amounts
paid or payable between the parent entity and the other members of the tax-consolidated group in accordance with the
arrangement. Further information about the tax funding arrangement is detailed in Note 7 to the financial statements. Where
the tax contribution amount recognised by each member of the tax-consolidated group for a particular period is different to
the aggregate of the current tax liability or asset and any deferred tax asset arising from unused tax losses and tax credits in
respect of that period, the difference is recognised as a contribution to (or distribution to) equity participants.
(S) RESTORATION AND REHABILITATION
A provision for restoration and rehabilitation is recognised when there is a present obligation as a result of exploration,
development and production activities undertaken, it is probable that an outflow of economic benefits will be required to settle
the obligation, and the amount of the provision can be measured reliably. The estimated future obligations include the costs
of dismantling and removal of facilities, restoration and monitoring of the affected areas. The provision for future restoration
costs is the best estimate of the present value of the expenditure required to settle the restoration obligation at the reporting
date. Future restoration costs are reviewed annually and any changes in the estimate are reflected in the present value of the
restoration provision at each reporting date.
The initial estimate of the restoration and rehabilitation provision relating to exploration, development and mining production
activities is capitalised into the cost of the related asset and amortised on the same basis as the related asset, unless the
present obligation arises from the production of the inventory in the period, in which case the amount is included in the cost
of production for the period. Changes in the estimate of the provision of restoration and rehabilitation are treated in the same
manner, except that the unwinding of the effect of discounting on the provision is recognised as a finance cost rather than
being capitalised into the cost of the related asset.
4. Critical accounting judgements and key sources of estimation uncertainty
Critical Judgments in Applying the Entity’s Accounting Policies
The following are the critical judgments that management has made in the process of applying the Group’s accounting policies
and that have the most significant effect on the amounts recognised in the financial statements:
(a) Provision for restoration and rehabilitation costs
The Group is required to decommission, rehabilitate and restore mines and processing sites at the end of their producing
lives to a condition acceptable to the relevant authorities. The provision has been calculated taking into account the estimated
future obligations including the costs of dismantling and removal of facilities, restoration and monitoring of the affected areas.
The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle the
restoration obligation at the reporting date.
(b) Ore reserve estimates
Estimates of recoverable quantities of reserves include assumptions on commodity prices, exchange rates, discount rates and
production costs for future cashflows. It also involves assessment and judgement of difficult geological models. The economic,
geological and technical factors used to estimate ore reserves may change from period to period. Changes in ore reserves
affect the carrying values of mine properties, property, plant and equipment, provision for rehabilitation assets and deferred
taxes. Ore reserves are integral to the amount of depreciation and amortisation charged to the Statement of Comprehensive
Income and the calculation of inventory.
Key Sources of Estimation Uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next financial year:
(a) Impairment of Inter Company Loans
The Company made loans and advances to its subsidiaries as detailed in Note 9 to the financial statements. These loans and
advances were established for the purpose of routing funds out of Australia to fund exploration and resource development
in Egypt. The recovery of these loans and advances is entirely dependent upon returns from the successful development of
mining operations in Egypt or from surpluses from the sale of either the subsidiary companies or their projects.
56
(b) Recovery of Capitalised Exploration Evaluation and Development Expenditure
The Group capitalises exploration, evaluation and development expenditure incurred on ongoing projects. The recoverability
of this capitalised exploration expenditure is entirely dependent upon returns from the successful development of mining
operations or from surpluses from the sale of the projects or the subsidiary companies that control the projects. At the point
that it is determined that any capitalised exploration expenditure is not recoverable, it is written off.
5. Revenue
An analysis of the consolidated entity’s and Company’s revenue for the year, from continuing operations, is as follows:
Revenue:
Gold sales
Silver sales
Interest revenue
Other revenue:
Sale of plant and equipment
VAT refund
-
Consolidated
Company
2010
$US’000
2009
$US’000
2010
$US’000
2009
$US’000
-
-
37,005
122
583
37,710
888
-
888
38,598
-
-
-
-
-
2,893
2,893
12
12
2,905
544
544
-
-
-
2,591
2,591
8
8
544
2,599
6. Profit/(Loss) for the year
Profit/(loss) for the year has been arrived at after crediting/(charging) the following gains/(losses) and expenses:
Gains and Losses
Net foreign exchange gain / (loss)
Expenses
Cost of Sales
Mine production costs
Movement in production inventory
Production royalty
Attributable to Egyptian Government
Administrative expenses
Corporate compliance
Corporate consultants
Employee entitlements
Salary and wages
Travel and accommodation
Other administration expenses
Depreciation and amortisation:
Amortisation of mine properties
Provision for rehabilitation
Depreciation of non-current assets
Share based payments:
Employee equity settled share based payments
Non-employee settled share based payments
3,614
3,614
(19,284)
(19,284)
4,523
4,523
(18,722)
(18,722)
-
-
-
-
-
(10,987)
7,440
(3,547)
(2,205)
(2,205)
(2,400)
(775)
(659)
(1,046)
(643)
(290)
(5,813)
-
-
(8,189)
(51)
(3,657)
(11,897)
(393)
(1,329)
(1,722)
-
-
-
-
-
-
-
(222)
(544)
(104)
(240)
(356)
(676)
(2,142)
(544)
(544)
(790)
(2,416)
(3,206)
-
-
-
-
-
-
-
(2,250)
(772)
(22)
(369)
(400)
(922)
(4,735)
(11)
(11)
(393)
(1,329)
(1,722)
(220)
(410)
(10)
(207)
(353)
(657)
(1,857)
(22)
(22)
(790)
(2,416)
(3,206)
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Notes to the Financial Statements
for the financial year ended 30 June 2010
7.
Income taxes
Income tax expense recognised in the profit or loss:
(a) Income tax expense
Current income tax
Current tax expense/(income) in respect of the
current year
Benefit arising from previously unrecognised
tax losses, tax credits or temporary differences
of a prior period that is used to reduce current
tax expense
Deferred income tax
Deferred tax expense/(income) relating to the
origination and reversal of temporary differences
Benefit/(liability) arising from previously
unrecognised tax losses, tax credits or temporary
differences of a prior period
Deferred tax expense relating to the reversal of
temporary differences
Total tax expense/(income)
Income tax expense/(credit) reported in
Statement of Comprehensive Income
-
-
-
-
Consolidated
Company
2010
$US’000
2009
$US’000
2010
$US’000
2009
$US’000
4,501
-
4,452
(4,501)
-
-
-
(4,452)
-
1,420
(9,607)
1,221
(9,475)
9,438
-
9,457
2,738
-
4,158
4,158
(169)
(169)
2,738
-
3,959
3,959
(18)
(18)
The prima facie income tax expense/(benefit) on the profit/loss before income tax reconciles to the income tax in the financial
statements as follows:
Profit /(Loss) before income tax
Tax expense / (income) calculated at 30% of
Profit before income tax (2009: 30%)
Tax effect of amounts which are not deductible/
taxable in calculating taxable income:
Non-deductible expenses
Previously unrecognised tax losses, tax offsets
and temporary differences now recognised as
deferred tax (asset)/liability
Exempt foreign profits
Under provision from prior years
Tax benefit of previously unrecognised tax losses
and tax credits of prior periods
Tax expense/(income) attributable to profit/(loss)
before tax
17,028
(22,271)
(1,401)
(21,208)
5,108
(6,681)
(420)
(6,362)
516
1,575
516
1,340
-
9,438
-
9,438
(4,679)
475
-
-
2,738
4,158
(4,501)
(169)
850
275
-
-
2,738
3,959
(4,434)
(18)
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on
taxable profits under the Australian tax law. There has been no change in the corporate tax rate when compared to the
previous reporting period.
58
(b)
Income tax recognised directly in equity
The following current and deferred amounts
were charged/(credited) directly to equity during
the period:
- Share issue expenses
(c) Current tax liabilities
Current tax payable
Consolidated
Company
2010
$US’000
2009
$US’000
2010
$US’000
2009
$US’000
(55)
(3,935)
(55)
(3,935)
444
444
444
444
489
489
(d) Deferred tax balances
Deferred tax assets comprise:
Business related costs
Losses
Unrealised foreign exchange gains and losses
Provisions
-
-
-
-
-
Unrecognised deferred tax assets
The following have not been brought to account
as assets:
Tax Losses - revenue
Tax Losses - capital
Temporary Differences
Tax Effect at 30%
-
-
-
4,950
514
17
5,481
1,644
3,852
31
221
4,104
-
-
-
-
-
493
493
148
4,950
514
17
5,481
1,644
489
489
3,852
31
21
3,904
493
493
148
-
-
-
TAX CONSOLIDATION
Relevance of tax consolidation to the consolidated entity
The company and its wholly-owned Australian resident entities have formed a tax-consolidated group with effect from
01 July 2003. The head entity within the tax-consolidated group is Centamin Egypt Limited. The members of the
tax-consolidated group are identified at Note 22.
Nature of tax funding arrangements and tax sharing agreements
Entities within the tax-consolidated group have entered into a tax funding arrangement and a tax-sharing agreement with
the head entity. Under the terms of the tax funding agreement, Centamin Egypt Limited and each of the entities in the
tax-consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on the current tax liability
or current tax asset of the entity. Such amounts are reflected in amounts receivable from or payable to other entities in the
tax-consolidated group.
The tax sharing agreement entered into between members of the tax-consolidated group provides for the determination of
the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No
amounts have been recognised in the financial statements in respect of this agreement as payment of any amounts under the
tax sharing agreement is considered remote.
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Notes to the Financial Statements
for the financial year ended 30 June 2010
8. Segment reporting
The Consolidated Entity has adopted AASB 8 “Operating Segments” and AASB 2007-3 “Amendments to Australian Accounting
Standards arising from AASB 8” with effect from 1 January 2009. AASB 8 requires operating segments to be identified on the
basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in
order to allocate resources to the segment and to assess its performance. In contrast, the predecessor standard (AASB 114
“Segment Reporting”) required an entity to identify two sets of segments (business and geographical) using a risks and
rewards approach, with the entity’s ‘system of internal financial reporting to key management personnel’ serving as the only
starting point for the identification of such segments.
In the case of the Centamin Group, the adoption of AASB 8 has changed the methodology used to identify segments however
the reporting segments that are disclosed in the financial report remain unchanged.
The Consolidated Entity is engaged in the business of exploration and mining of precious and base metals only, which is
characterised as one operating segment only. As the consolidated Entity has only one operating segment, all the necessary
reporting disclosures are disclosed elsewhere in the notes to the financial statements.
9. Trade and other receivables
Current
Gold sales debtor
GST receivable
Non-current
Loans and advances to subsidiaries
Less: Allowance for doubtful debts
Consolidated
Company
2010
$US’000
2009
$US’000
2010
$US’000
2009
$US’000
3,304
12
3,316
-
-
-
-
-
-
-
-
-
30
30
5
5
14
14
426,296
(2,537)
423,759
340,141
(2,537)
337,604
The intercompany loans receivable are interest free and have no set terms of repayment. The recoverability of the loans from
the controlled entities is dependent on the successful development and economic exploitation of the controlled entities’
exploration interests. The repayments of the loans are not expected to occur within the next 12 months.
10. Inventories
Current
Mining stockpiles and ore in circuit
Stores inventories at cost
11. Other Assets
Current
Prepayments
Performance Bonds
-
7,440
14,421
21,861
-
268
268
-
-
-
-
-
-
3,780
3,780
75
870
945
-
-
-
-
-
-
60
12. Property, plant and equipment
Consolidated
Gross Carrying Amount
Balance at 30 June 2009
Additions*
Disposals
Balance at 30 June 2010
Accumulated Depreciation
Balance at 30 June 2009
Depreciation expense
Disposals
1,572
573
2,145
(631)
(511)
-
-
-
-
-
-
Balance at 30 June 2010
(1,142)
Net Book Value
As at 30 June 2009
As at 30 June 2010
941
1,003
Office
Equipment
$US’000
Land and
Buildings
$US’000
Plant and
Equipment
$US’000
Motor
Vehicles
$US’000
Total
$US’000
14
14
(7)
(7)
7
7
20,824
220,304
(3,936)
237,192
(1,055)
(2,344)
923
(2,476)
19,769
234,716
42,990
13,336
(6)
56,320
(3,828)
(5,152)
6
(8,974)
39,162
47,346
65,400
234,213
(3,942)
295,671
(5,521)
(8,007)
929
(12,599)
59,879
283,072
* Figure includes non-cash transfers of $234,213,000 from development expenditure upon completion of Sukari construction activities.
Company
Gross Carrying Amount
Balance at 30 June 2009
Additions
Disposals
Balance at 30 June 2010
Accumulated Depreciation
Balance at 30 June 2009
Depreciation expense
Disposals
Balance at 30 June 2010
Net Book Value
As at 30 June 2009
As at 30 June 2010
-
-
Office
Equipment
$US’000
Land and
Buildings
$US’000
Plant and
Equipment
$US’000
Motor
Vehicles
$US’000
Total
$US’000
-
-
-
-
138
4
142
(122)
(11)
(133)
16
9
5
5
(3)
(3)
2
2
-
-
-
-
-
-
290
-
290
-
(290)
-
(290)
-
-
-
6
(6)
(6)
6
439
4
(6)
437
(421)
(11)
6
(426)
18
11
The following useful lives are used in the calculation of depreciation:
Plant & Equipment
Office Equipment
Land and Buildings
Motor Vehicles
- 4 – 10 years
- 4 – 10 years
- 4 – 20 years
- 2 – 8 years
Aggregate depreciation allocated, whether recognised as an expense or capitalised as part of the carrying amount of other
assets during the year:
0
1
0
2
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Notes to the Financial Statements
for the financial year ended 30 June 2010
Plant & Equipment
Office Equipment
Land and Buildings
Motor Vehicles
13. Other financial assets
Non-current
Investments in subsidiaries
Recoverable amount write down
-
-
-
-
Consolidated
Company
2010
$US’000
2009
$US’000
2010
$US’000
2009
$US’000
2,061
511
5,152
7,724
-
-
-
487
290
1
2,352
3,130
-
11
11
1
19
1
21
-
-
-
4,868
(366)
4,502
4,868
(366)
4,502
14. Exploration, evaluation and development expenditure
Exploration and evaluation phase (at cost) (a)
Balance at the beginning of the year
Expenditure for the year
Balance at the end of the year
Development phase (at cost) (b)
Balance at the beginning of the year
Expenditure for the year
Accumulated amortisation
Capitalised pre-production revenue
Transfers to Property, Plant & Equipment
16,236
10,463
26,699
120,930
121,446
26,699
12,015
38,714
242,376
136,306
(8,189)
(36,469)
(234,213)
-
-
-
Balance at the end of the year
99,811
242,376
-
-
-
-
-
-
-
302
302
293
9
302
-
-
-
-
-
-
Net book value of exploration, evaluation and
development phase expenditure
138,525
269,075
302
302
(a) Included within the cost amount of exploration evaluation and development assets is $5.3M being the excess of
consideration over the net tangible assets acquired on the acquisition of Pharaoh Gold Mines NL in January 1999. This
amount has been treated as part of the cost of exploration, evaluation and development. Management believe that the
recovery of these amounts will satisfactorily be made through the exploitation of the project in due course.
(b) The Sukari Gold Project has several planned phases of development. Open pit waste removal, underground
capital development and process plant expansion activities are being separately accounted for as development
phase expenditure.
15. Trade and other payables
Current
Trade payables
Other creditors and accruals
Consolidated
Company
Note
2010
$US’000
2009
$US’000
2010
$US’000
2009
$US’000
(i)
(ii)
21,318
886
22,204
7,290
164
7,454
-
202
110
312
145
145
(i) Trade payables are interest free for periods ranging from 30 to 180 days. Thereafter interest is charged at commercial
rates. The consolidated entity has financial risk management policies in place to ensure that all payables are paid within
the credit timeframe.
(ii) The 2009 amount includes an unsecured loan of US$150,000 payable 14 days after commencement of commercial
production at the Sukari project. There is no interest payable. Prior to 30 June 2010, the loan was settled in full.
62
16. Provisions
Current
Employee benefits
Non-current
Employee Benefits
Restoration and rehabilitation
Consolidated
Company
Note
2010
$US’000
2009
$US’000
2010
$US’000
2009
$US’000
(i)
(ii)
556
556
171
2,451
2,622
606
606
130
1,606
1,736
-
-
-
144
144
70
70
-
-
-
Movement in restoration and rehabilitation provision
Balance at beginning of financial year
Additional provision recognised
Unwinding of discount
Balance at end of financial year
Consolidated
2010
$US’000
2009
$US’000
1,606
685
160
2,451
522
710
374
1,606
(i) Employee benefits relate to annual, sick and long service leave entitlements outstanding as at 30 June 2010. The current
provision for employee benefits includes $340,000 (Company $32,000) of annual leave entitlements accrued but not
expected to be taken within 12 months (2009: $280,000 and $28,000 for the Group and Company respectively).
(ii) The provision for restoration and rehabilitation represents the present value of the directors’ best estimate of the future
sacrifice of the economic benefits that will be required to remove the facilities and restore the affected areas at the
Company’s sites. This estimate has been made on the basis of benchmark assessments of restoration works required
following mine closure and after taking into account the projected area to be disturbed over the life of the mine. Cash
outflows are expected to commence toward the end of current mine life.
17. Issued capital
Fully paid ordinary shares
Balance at beginning of financial year
Issue of shares upon exercise of options
and warrants
Transfer from share options reserve
Other placements
Share issue costs
Tax effect on share issue costs
Consolidated
Company
2010
$US’000
2009
$US’000
2010
$US’000
2009
$US’000
416,886
352,948
416,886
352,948
16,262
6,442
27,023
(1,572)
55
1,278
1,817
60,127
(3,219)
3,935
16,262
6,442
27,023
(1,572)
55
1,278
1,817
60,127
(3,219)
3,935
Balance at end of financial year
465,096
416,886
465,096
416,886
Change to the then Corporations Law abolished the authorised capital and par value concept in relation to share capital from
01 July 1998. Therefore, the Company does not have a limited amount of authorised capital and issued shares do not have a
par value.
Fully Paid Ordinary Shares
Number
$’000
Number
$’000
2010
2009
Balance at beginning of financial year
Issue of shares upon exercise of options
and warrants
Other placements (net of share issue costs)
991,940,623
416,886
877,419,163
352,948
17,877,710
19,000,000
22,704
25,506
2,240,000
112,281,460
3,095
60,843
416,886
Balance at end of financial year
1,028,818,333
465,096
991,940,623
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
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Notes to the Financial Statements
for the financial year ended 30 June 2010
Share options granted under the employee share option plan
In accordance with the provisions of the employee share option plans, as at 30 June 2010, executives and employees have
options over 2,720,000 ordinary shares (of which 175,000 are unvested). The expiry dates of the granted options are detailed
in Note 28. Share options granted under the employee share option plan carry no rights to dividends and no voting rights.
Further details of the employee share option plan are contained in Note 28 to the financial statements.
Share warrants on issue
As part of capital raisings undertaken in Canada during the previous and current financial years, the Company was required
to issue broker warrants as part of the fees. Broker warrants are identical in nature to share options however they are
differentiated as such because the latter in Canada typically relates to options issued to employees under employee share
plans. As at 30 June 2010, there were no broker warrants (2009: 9,407,710) on issue over an equivalent number of ordinary
shares. Further details of the share warrants are contained in Note 29 to the financial statements.
18. Reserves
Option reserve
Asset realisation reserve
Capital reserve
Share option reserve
Option reserve
Balance at beginning of financial year
Movements during the period
Balance at the end of financial year
Consolidated
Company
2010
$US’000
2009
$US’000
2010
$US’000
2009
$US’000
-
-
1,857
438
1,942
4,237
1,857
1,857
-
-
1,857
438
6,662
8,957
1,857
1,857
-
1,857
438
490
1,942
4,727
1,857
1,857
-
1,857
438
490
6,662
9,447
1,857
1,857
The option reserve has been created from the issuing of options for a consideration greater than their then nominal or par
value.
Asset realisation reserve
Balance at beginning of financial year
Movements during the period
Balance at the end of financial year
-
438
438
-
438
438
The asset realisation reserve has been created from the realisation of particular assets.
Capital reserve
Balance at beginning of financial year
Movements during the period
Balance at the end of financial year
-
-
-
-
-
-
-
-
438
438
490
490
-
-
438
438
490
490
The capital reserve has been created from the cancellation of shares in the Company held by Pharaoh Gold mines NL.
Share option reserve
Balance at beginning of financial year
Cost of share based payments
Transfer to issued capital
Balance at the end of financial year
6,662
1,722
(6,442)
1,942
5,273
3,206
(1,817)
6,662
6,662
1,722
(6,442)
1,942
5,273
3,206
(1,817)
6,662
The share option reserve arises on the grant of share options to employees under the employee share option plan and on grant
of broker warrants. Amounts are transferred out of the reserve and into issued capital when the options are exercised.
64
19. Commitments for expenditure
(a) Capital expenditure commitments
Plant and equipment
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
(b) Operating Lease commitments
Office premises
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
Consolidated
Company
2010
$US’000
2009
$US’000
2010
$US’000
2009
$US’000
13,800
21,341
-
-
-
-
-
-
-
-
13,800
62
62
21,341
62
62
-
-
-
-
-
-
-
-
-
-
-
-
45
45
45
45
Operating lease commitments are limited to office accommodation in Alexandria, Egypt and Perth, Australia.
20. Contingent liabilities and contingent assets
There are no contingent liabilities and contingent assets to report as at 30 June 2010.
21. Net assets of the consolidated entity
In the prior year, the net asset position of the consolidated entity was less than that of the Company. This position was a result
of fees being charged to the subsidiary in prior periods through the inter-company account which were expensed within the
subsidiary. Management were of the opinion that it would have been misleading to impair the inter-company receivable and
were of the belief that the recovery of these amounts would satisfactorily be made through the exploitation of the project.
22. Particulars in relation to subsidiaries
Parent entity
Centamin Egypt Limited
Subsidiaries
Viking Resources Limited
North African Resources NL
Pharaoh Gold Mines NL
Centamin Limited
Country of Incorporation
Australia
Australia
Australia
Australia
Bermuda
Ownership Interest
2010
%
100
100
100
100
2009
%
100
100
100
100
The parent entity is the head of the group for tax consolidation purposes and the subsidiaries, with the exception of Centamin
Limited, are all members of this same tax consolidation group. Pursuant to ASIC Class Order 98/1418 (as amended) dated 13
August 1998, the wholly owned Australian subsidiaries listed above are relieved from the Corporations Act 2001 requirements
for preparation, audit and lodgement of financial reports and directors’ report. It is a condition of the Class Order that the
Company and each of the subsidiaries enter into a Deed of Cross Guarantee. The effect of the Deed is that the Company
guarantees to each creditor payment in full of any debt in the event of winding up of any of the subsidiaries under certain
provisions of the Corporations Act 2001. If a winding up occurs under the provisions of the Act, the Company will only be liable
in the event that after six months any creditor has not been paid in full. The subsidiaries have also given similar guarantees in
the event the Company is wound up.
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Notes to the Financial Statements
for the financial year ended 30 June 2010
A Statement of Comprehensive Income and Statement of Financial Position, comprising the Company and controlled entities
which are party to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, at 30 June 2010
is set out as follows:
(a) Summarised Statement of Comprehensive Income
Profit/(Loss) Before tax
Income Tax Expense
Net Profit/(Loss) after tax
(b) Summarised Statement of Financial Position
2010
$US’000
2009
$US’000
17,020
(4,158)
12,862
(22,164)
169
(21,995)
-
31,325
3,316
21,861
268
56,770
283,072
138,596
421,668
478,438
22,204
444
556
23,204
2,622
2,622
25,826
452,612
465,083
4,237
(16,708)
452,612
68,601
30
3,780
945
73,356
59,879
4,104
269,053
333,036
406,392
7,454
444
606
8,504
1,736
1,736
10,240
396,152
416,781
8,957
(29,586)
396,152
ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other Assets
Total current assets
Plant and equipment
Deferred tax assets
Exploration, evaluation and development
Total non-current assets
Total assets
LIABILITIES
Trade and other payables
Current tax liabilities
Provisions
Total current liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Accumulated losses
Total equity
23. Auditors’ remuneration
Auditor of the parent entity
Auditing or review of the financial report
Preparation of the tax return
Other non-audit services
Consolidated
Company
2010
$US’000
2009
$US’000
2010
$US’000
2009
$US’000
177,783
67,686
544,642
790,111
-
226,655
31,885
258,540
177,783
67,686
544,642
790,111
-
226,655
31,885
258,540
The auditor of Centamin Egypt Limited is Deloitte Touche Tohmatsu. Other non-audit services included the provision of advice
and due diligence activities in relation to the Company’s main board listing on the London Stock Exchange. These services
were provided by both Australian and United Kingdom offices of Deloitte Touche Tohmatsu.
66
24. Jointly controlled operations
The consolidated entity has material interests in the following ventures:-
Name of joint venture
Principal Activities
Percentage Interest
Egyptian Pharaoh Investments
Sukari Gold Mines
Exploration
Exploration & Production
2010
%
50
50
2009
%
50
50
The consolidated entity’s interest as a joint venture partner, in assets employed in the above jointly controlled operations
and assets is detailed below. The amounts are included in the consolidated financial statements under their respective asset
categories.
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments and deposits
Non-current assets
Exploration, evaluation and development
Consolidated & Company
2009
2010
$US’000
$US’000
-
-
-
18,230
3,305
11,739
181
33,455
46,253
46,253
5
5
210
210
Contingent liabilities and capital commitments arising from the Group’s interests in joint ventures are disclosed in Notes 19
and 20.
25. Earnings per share
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
Basic Earnings/(Loss) per Share
Consolidated
2010
Cents Per Share
2009
Cents Per Share
1.26
1.26
(2.40)
(2.40)
The earnings and weighted average number of ordinary shares used in the calculation of basic loss and earnings per share are
as follows:
Earnings/(Loss) used in the calculation of basic EPS
2010
$’000
2009
$’000
12,870
(22,102)
2010
No.
2009
No.
Weighted average number of ordinary shares for the purposes of basic EPS
1,018,425,873
920,993,978
Diluted Earnings/(Loss) per Share
The earnings/(loss)and weighted average number of ordinary shares used in the calculation of diluted earnings per share are
as follows:
Earnings/(Loss) used in the calculation of diluted EPS
2010
$’000
2009
$’000
12,870
(22,102)
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Notes to the Financial Statements
for the financial year ended 30 June 2010
2010
No.
2009
No.
Weighted average number of ordinary shares for the purposes of diluted EPS
1,018,425,873
920,993,978
Weighted average number of ordinary shares for the purposes of basic EPS
Shares deemed to be issued for no consideration in respect of employee options
Shares deemed to be issued for no consideration in respect of broker warrants
1,018,425,873
920,993,978
1,396,627 -
-
-
Weighted average number of ordinary shares used in the calculation of
diluted EPS
1,019,822,500
920,993,978
No potential ordinary shares were excluded from the calculation of weighted average number of ordinary shares for the
purposes of diluted earnings/(loss) per share.
26. Notes to the statements of cash flows
(a) Reconciliation of cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash includes cash on hand and at bank and deposits. Cash and cash
equivalents as at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related item in the
Statement of Financial Position as follows:
Cash and cash equivalents
31,326
68,609
14,883
58,747
Consolidated
Company
2010
$US’000
2009
$US’000
2010
$US’000
2009
$US’000
(b) Reconciliation of profit/(loss) for the year to net cash flows from operating activities
Profit/(Loss) for the year
Add/(less) non-cash items:
Depreciation of non-current assets
Amortisation of mine properties
Foreign exchange rate (gain)/loss
Equity settled share based payments
Income tax (income)/expense
Changes in assets and liabilities during the year:
Decrease/(increase) in receivables
Decrease/(increase) in inventories
Decrease/(increase) in prepayments
Increase/(decrease) in trade creditors and
accruals
Increase/(decrease) in provisions
Net cash generated by/(used in) operating activities
12,870
(22,102)
(5,360)
(21,190)
-
3,657
8,189
(3,614)
1,722
4,158
(3,286)
(18,081)
677
14,750
836
21,878
544
11
21
-
-
-
19,284
3,206
(169)
(5)
(1,196)
(354)
1,617
1,083
1,908
-
-
-
(4,523)
1,722
3,959
9
167
74
(3,941)
18,722
3,206
(18)
(2)
136
19
894
(c) Non-cash financing and investing activities
During the year, 788,437 broker warrants with an exercise price of C$1.56 each and an expiry date of 16 July 2011, and
161,563 broker warrants with an exercise price of C$1.52 each and an expiry date of 26 August 2011, were issued as partial
compensation in relation to the capital raising which closed 16 July 2010.
In addition to the above, in connection with the Company’s move to the London Stock Exchange’s Main Market for listed
securities, the Company issued Ambrian Partners Limited and Investec Bank Plc 500,000 unquoted options each with an
exercise price of A$1.50 and an expiry date of 28 November 2010, being part payment for the provision of professional
services with regards to the migration.
68
27. Financial instruments
a) Group risk management
The Group manages its capital to ensure that entities within the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the cash and equity balance. The Group’s overall strategy
remains unchanged from 2009.
The capital structure consists of cash and cash equivalents and equity attributable to equity holders of the parent, comprising
issued capital and reserves as disclosed in Notes 17 and 18. The Group operates in Australia and Egypt. None of the Group’s
entities are subject to externally imposed capital requirements.
The Group utilises inflows of funds toward the ongoing exploration and development of the Sukari Gold Project in Egypt.
b) Financial risk management and objectives
The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise
potential risk adverse effects and ensure that net cash flows are sufficient to support the delivery of the Group’s financial
targets whilst protecting future financial security. The Group continually monitors and tests its forecast financial position against
these objectives.
The Group’s activities expose it to a variety of financial risks: market, commodity, credit, liquidity, foreign exchange and interest
rate. These risks are managed under Board approved directives through the Audit Committee. The Group’s principal financial
instruments comprise interest bearing cash and short term deposits. Other financial instruments include trade receivables and
trade payables, which arise directly from operations.
Financial assets
Cash and cash equivalents
Loans and receivables
Financial liabilities
Amortised cost
Consolidated
Company
2010
$US’000
2009
$US’000
2010
$US’000
2009
$US’000
31,326
3,316
34,642
22,204
22,204
68,609
30
68,639
7,454
7,454
14,883
5
14,888
212
212
58,747
337,618
396,365
145
145
It is, and has been throughout the period under review, Group policy that no speculative trading in financial instruments be
undertaken.
c) Market risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily
with respect to the Australian and Canadian dollars. Foreign exchange risk arises from future commercial transactions and
recognised assets and liabilities that are denominated in a currency that is not the entity’s functional currency. The risk is
measured by regularly monitoring, forecasting and performing sensitivity analysis on the Group’s financial position.
The financial instruments denominated in Australian and Canadian dollars are as follows:
Financial assets
Cash
Trade and other receivables
Financial liabilities
Trade and other payables
Net exposure
Australian Dollar
Canadian Dollar
2010
A$’000
2009
A$’000
2010
C$’000
2009
C$’000
10,515
13
10,528
3,504
3,504
7,024
48,675
23
48,698
520
520
-
-
-
1,904
1,904
-
-
-
1,982
1,982
48,178
1,904
1,982
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Notes to the Financial Statements
for the financial year ended 30 June 2010
The following table summarises the sensitivity of financial instruments held at the balance date to movements in the exchange
rate of the Australian and Canadian dollar to the United States dollar, with all other variables held constant. The 10% sensitivity
is based on reasonably possible changes, over a financial year, using the observed range of actual historical rates for the
preceeding five year period.
Post-tax gain / (loss)
AUD / USD +10%
AUD / USD -10%
CAD / USD +10%
CAD / USD -10%
Impact on profit
Impact on equity
2010
US$’000
2009
US$’000
2010
US$’000
2009
US$’000
702
(638)
190
(173)
4,818
(4,379)
198
(180)
-
-
-
-
-
-
-
-
The Group’s sensitivity to foreign currency has decreased at the end of the current period mainly due to the decreased foreign
currency cash holdings in Canadian dollars and Australian dollars.
The Group has not entered into forward foreign exchange contracts. Natural hedges are utilised wherever possible to offset
foreign currency liabilities.
The Company maintains a policy of not hedging its currency positions and maintains currency holdings in line with underlying
requirements and commitments.
d) Commodity price risk
The Group’s future revenue forecasts are exposed to commodity price fluctuations, in particular gold prices.
The Group has not entered into forward gold hedging contracts.
e)
Interest rate risk
The Group’s main interest rate risk arises from cash and short term deposits and is not considered to be a material risk due
to the short term nature of these financial instruments. Cash deposits are placed on term period of no more than 30 days
at a time.
The financial instruments exposed to interest rate risk and the consolidated entity’s exposure to interest rate risk as at balance
date were as follows:
Weighted
Average
Effective
Interest Rate
%
Less than
1 month
$US’000
1-12 months
$US’000
>12 months
$US’000
Total
$US’000
Consolidated
2010
Financial assets
Variable interest rate instruments
Non-interest bearing
Financial liabilities
Variable interest rate instruments
Non-interest bearing
2009
Financial assets
Variable interest rate instruments
Non-interest bearing
Financial liabilities
Variable interest rate instruments
Non-interest bearing
2.18
-
-
-
2.53
-
-
-
-
-
-
-
27,103
4,223
-
4,223
27,103
-
22,204
22,204
1,000
1,000
67,633
1,006
-
1,006
67,633
-
7,454
7,454
1,050
1,050
-
-
-
-
-
-
-
-
27,103
4,223
31,326
23,375
23,375
67,633
1,006
68,639
8,634
8,634
-
-
171
171
130
130
70
Company
2010
Financial assets
Variable interest rate instruments
Non- interest bearing
Financial liabilities
Variable interest rate instruments
Non-interest bearing
2009
Financial assets
Variable interest rate instruments
Non- interest bearing
Financial liabilities
Variable interest rate instruments
Non-interest bearing
Weighted
Average
Effective
Interest Rate
%
Less than
1 month
$US’000
1-12 months
$US’000
>12 months
$US’000
Total
$US’000
2.75
-
-
-
2.50
-
-
-
-
-
-
-
11,338
-
3,550
-
3,550
11,338
423,759
423,759
-
-
-
312
312
990
990
145
145
-
-
-
633
633
57,771
-
57,771
337,555
337,555
-
-
-
559
559
11,338
427,309
438,647
945
945
57,771
338,545
396,316
704
704
-
-
f)
Liquidity risk
The Group’s liquidity position is managed to ensure that sufficient funds are available to meet its financial commitments in a
timely and cost effective manner.
Ultimate responsibility or liquidity risk management rests with the Board of Directors, who have built an appropriate
management framework for the management of the Group’s funding requirements. The Group manages liquidity risk by
maintaining adequate cash reserves and management monitors rolling forecasts of the Group’s liquidity on the basis of
expected cash flow. The tables above reflect a balanced view of cash inflows and outflows and shows the implied risk based
on those values. Trade payables and other financial liabilities originate from the financing of assets used in the Group’s ongoing
operations. These assets are considered in the Group’s overall liquidity risk. Management continually reviews the Group liquidity
position including cash flow forecast to determine the forecast liquidity position and maintain appropriate liquidity levels.
g) Credit Risk
Credit risk refers to the risk that counter-party will default on its contractual obligations resulting in financial loss to the Group.
The Group has adopted a policy of only dealing with credit-worthy counter-parties and obtaining sufficient collateral or other
security where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group measures credit risk
on a fair value basis. The Group does not have any significant credit risk exposure to any single counter-party or any Group
counter-parties having similar characteristics, except for the cash balances held in Canadian and Australian dollars which are
held with a financial institution with a high credit rating.
The gross carrying amount of financial assets recorded in the financial statements represents the Group’s maximum exposure
to credit risk without taking account of the value of collateral or other security obtained.
h) Fair Value
The carrying amount of financial assets and financial liabilities recorded in the financial statements represents their respective
fair values, determined in accordance with the accounting policies disclosed in Note 3 to the financial statements.
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Notes to the Financial Statements
for the financial year ended 30 June 2010
28. Share based payments
The consolidated entity has an Employee Option Plan in place for executives and employees. Options are issued to key
management personnel under the Employee Option Plan 2006 (previously the Employee Option Plan 2002) as part of their
remuneration. Options are offered to key management personnel at the discretion of the Directors, having regard, among
other things, to the length of service with the consolidated entity, the past and potential contribution of the person to the
consolidated entity and in some cases, individual performance.
Each employee share option converts into one ordinary share of the Company on exercise. The options carry neither rights
to dividends nor voting rights. Options vest over a period of 12 months, with 50% vesting and exercisable after six months
and the other 50% vesting and exercisable after 12 months of issue. All options are issued with a term of three years. At the
discretion of the Directors part or all of the options issued to an executive or employee may be subject to performance based
hurdles. No performance based hurdles have been applied for options granted to date.
In addition 4,250,000 options (Series 5) were issued to three employees outside of the Employee Share Option Plan on
31 October 2005. Details of those options were:
■ 2,500,000 of those options were subject to performance based hurdles. Due to the cessation of employment by the
employee to whom the options were issued they lapsed in May 2007.
■ 1,000,000 of those options vest and are exercisable over a period of two years, with 50% vesting and exercisable after 12
months and the other 50% vesting and exercisable after 24 months of issue. These options have a term of 5 years. As at
30 June 2010, 100,000 of these options remained unexercised.
■ 750,000 of those options vest and are exercisable immediately. These have a term of 5 years. As at 30 June 2010, none
of these options remained unexercised.
In addition 2,000,000 options (Series 8) were issued to the Company’s share broker in Canada as part compensation for
professional services provided during the listing process on the Toronto Stock Exchange in January 2007, and subsequent
capital raising in November 2007. Those options were exercisable any time within 2 years of grant date.
In addition, 1,630,150 options (Series 18) were issued pursuant with the agreement with Macquarie Bank Limited to provide
a corporate loan facility of up to US$25 million (as announced on 2 April 2009). Those options were exercisable any time on
or before 31 December 2012.
In addition, 1,000,000 options (Series 20) were issued pursuant with the agreement with Ambrian Partners Limited and
Investec Bank Plc to provide advisory services associated with the main board of the London Stock Exchange. Those
options are exercisable any time on or before 28 November 2010. As at 30 June 2010, 500,000 Series 20 options had
been exercised.
The following share based payment arrangements were in existence during the current and comparative reporting periods:
Options Series
Series 5
Series 6
Series 7
Series 8
Series 9
Series 10
Series 11
Series 12
Series 13
Series 14
Series 15
Series 16
Number
Originally
Issued
4,250,000
1,500,000
250,000
2,000,000
3,615,000
2,330,000
1,500,000
250,000
3,500,000
250,000
750,000
250,000
-
-
-
-
-
-
-
-
-
Number
Outstanding at
30 June 2010
Grant Date
Expiry /
Exercise Date
Exercise
Price
A$
Fair Value at
Grant Date
A$
100,000
31 Oct 2005
31 Oct 2010
08 Dec 2005
08 Dec 2008
30 Aug 2006
30 Aug 2009
09 Jan 2007
09 Jan 2010
31 Jan 2007
31 Jan 2010
24 May 2007
24 May 2010
25 Jun 2007
25 Jun 2010
15 Oct 2007
15 Oct 2010
1,120,000
16 Apr 2008
15 Apr 2011
250,000
25 Aug 2008
25 Aug 2011
28 Oct 2008
25 Oct 2011
28 Nov 2008
28 Nov 2011
0.3500
0.4355
0.6566
0.8000
0.7106
1.0500
1.1636
1.4034
1.7022
1.1999
0.7033
0.6750
0.1753
0.1495
0.2785
0.2393
0.3706
0.4661
0.3210
0.4002
0.4015
0.3070
0.1964
0.3676
72
Options Series
Series 17
Series 18
Series 19
Series 20
Number
Originally
Issued
Number
Outstanding at
30 June 2010
Grant Date
Expiry /
Exercise Date
Exercise
Price
A$
Fair Value at
Grant Date
A$
1,000,000
1,000,000
19 Dec 2008
19 Dec 2011
1,630,150
1,630,150
15 Apr 2009
31 Dec 2012
350,000
350,000
06 Aug 2009
06 Aug 2012
1,000,000
500,000
28 Nov 2009
28 Nov 2010
1.0000
1.2000
1.8658
1.5000
0.3568
0.4326
0.8113
0.9862
24,425,150
The weighted average fair value of the share options granted during the financial year was A$1.5948 (2009: A$0.3551).
The share options granted to executive and employees have been valued internally by the Company using the Black and
Scholes option pricing method. Options are offered to executives and employees at the discretion of the Directors, having
regard, among other things, to the length of service with the consolidated entity, and to the past and potential contribution
of the person to the consolidated entity and in some cases, individual performance. The number of options granted is at the
Directors’ discretion. The weighted average closing price of the shares in Centamin Egypt Limited for the financial year was
C$2.03 (2009: A$1.06). The volatility input into the model was 75.00% based on the historical share price volatility over the
past 3 years (2009: 70.00%) and the government rate similar to the term of the option used was 5.75% (2009: 4.805%).
Options Series
Series 3
Series 4
Series 5
Series 6
Series 7
Series 8
Series 9
Series 10
Grant date share price
A$0.33
A$0.34
A$0.38
A$0.43
A$0.72
A$0.85
A$0.87
Exercise price
A$0.28
A$0.28
A$0.35
A$0.436
A$0.657
A$0.80
A$0.711
A$1.12
A$1.05
Expected volatility
60.00%
60.00%
60.00%
60.00%
60.00%
60.00%
60.00%
60.00%
Option life
Dividend yield
3 years
3 years
5 years
3 years
3 years
2 years
3 years
3 years
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Risk-free interest rate
5.50%
5.50%
5.25%
5.25%
5.50%
5.50%
5.50%
5.50%
Options Series
Series 11
Series 12
Series 13
Series 14
Series 15
Series 16
Series 17
Series 18
Grant date share price
A$1.071
A$1.400
A$1.490
A$1.09
A$0.58
A$0.81
A$0.95
Exercise price
A$1.164
A$1.403
A$1.702
A$1.20
A$0.703
A$0.675
A$1.00
Expected volatility
60.00%
52.00%
52.00%
52.00%
70%
70%
70%
A$1.14
A$1.20
70%
Option life
Dividend yield
3 years
3 years
3 years
3 years
3 years
3 years
3 years
45 months
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Risk-free interest rate
5.50%
5.84%
5.84%
5.65%
5.29%
4.58%
4.02%
4.02%
Options Series
Series 19
Series 20
Grant date share price
A$1.89
A$2.35
Exercise price
A$1.8658
A$1.500
Expected volatility
75.00%
75.00%
Option life
Dividend yield
3 years
1 year
0.00
0.00
Risk-free interest rate
5.75%
5.25%
0
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73
Notes to the Financial Statements
for the financial year ended 30 June 2010
The following reconciles the outstanding share options granted under the Employee Option Plan, and other share based
payment arrangements, at the beginning and end of the financial year:
Balance at beginning of financial year
Granted during the financial year (a)
Forfeited/Expired/Lapsed during the financial year (b)
Exercised during the financial year (c)
Balance at the end of the financial year (d)
Exercisable at the end of the financial year
a) Granted during the financial year
2010
2009
Number of
options
11,305,150
1,350,000
(185,000)
(7,520,000)
4,950,150
4,775,150
A$ Weighted
average
exercise price
1.1674
1.5948
1.0081
1.1387
1.3334
1.3139
Number of
options
11,785,000
3,880,150
(1,500,000)
(2,860,000)
11,305,150
10,180,150
A$ Weighted
average
exercise price
0.3790
1.0186
0.7699
0.5424
1.1674
1.1990
Options Series
Series 19
Series 20
Number
Grant Date
Expiry /
Exercise Date
350,000
06 Aug 2009
06 Aug 2012
1,000,000
28 Nov 2009
28 Nov 2010
1,350,000
Exercise
Price
A$
1.8658
1.5000
Fair Value at
Grant Date
A$
0.7960
0.9258
b) Forfeited/Expired/Lapsed during the financial year
Options Series
Series 13
Series 16
Number
Grant Date
Expiry /
Exercise Date
Exercise Price
A$
60,000
16 Apr 2008
16 Apr 2011
125,000
28 Nov 2008
28 Nov 2011
1.7022
0.6750
185,000
Fair Value at
Grant Date
A$
0.4015
0.3676
c) Exercised during the financial year
2010 - Options Series
Number Exercised
Exercise Date
Share Price at Exercise Date C$
Series 5
Series 9
Series 10
74
200,000
250,000
500,000
25,000
190,000
100,000
40,000
50,000
100,000
45,000
50,000
40,000
50,000
10,000
30,000
130,000
200,000
300,000
500,000
790,000
100,000
4 Aug 2009
19 May 2010
09 Jun 2010
01 Jul 2009
02 Jul 2009
06 Jul 2009
07 Jul 2009
08 Jul 2009
13 Jul 2009
20 Jul 2009
22 Jul 2009
14 Jan 2010
18 Jan 2010
02 Jul 2009
07 Jul 2009
08 Jul 2009
20 Jul 2009
11 Aug 2009
17 Sep 2009
15 Oct 2009
16 Nov 2009
1.7500
2.2700
2.3200
1.6600
1.6600
1.5900
1.5900
1.5000
1.5700
1.6900
1.6000
2.1600
2.1700
1.6600
1.5900
1.5000
1.6900
1.5800
1.6900
1.9100
2.4000
2010 - Options Series
Number Exercised
Exercise Date
Share Price at Exercise Date C$
Series 12
Series 13
Series 15
Series 20
100,000
150,000
70,000
30,000
40,000
60,000
45,000
50,000
100,000
165,000
40,000
50,000
155,000
50,000
155,000
50,000
450,000
460,000
195,000
20,000
135,000
200,000
300,000
250,000
500,000
7,520,000
03 Jun 2010
18 Jun 2010
13 Nov 2009
02 Dec 2009
10 Mar 2010
11 Mar 2010
26 Mar 2010
30 Mar 2010
08 Apr 2010
20 Apr 2010
23 Apr 2010
03 May 2010
04 May 2010
06 May 2010
19 May 2010
21 May 2010
26 May 2010
02 Jun 2010
09 Jun 2010
11 Jun 2010
16 Jun 2010
19 Apr 2010
16 Jun 2010
30 Jun 2010
18 Jun 2010
2.2800
2.5500
2.3400
2.3700
1.9900
2.0000
1.8500
1.9700
2.1400
2.0400
2.0300
2.1300
2.0800
2.3400
2.2700
2.0400
2.3000
2.3000
2.3200
2.4300
2.5700
2.0000
2.5700
2.5900
2.5500
2009 - Options Series
Number Exercised
Exercise Date
Share Price at Exercise Date A$
Series 5
Series 6
Series 7
Series 9
Series 10
Series 16
600,000
20,000
500,000
500,000
250,000
250,000
75,000
50,000
50,000
100,000
100,000
100,000
35,000
100,000
5,000
125,000
2,860,000
04 Aug 2008
24 Mar 2009
1 Oct 2008
25 Nov 2008
06 Aug 2008
06 Aug 2008
22 May 2009
25 May 2009
28 May 2009
02 Jun 2009
04 Jun 2009
12 Jun 2009
29 Jun 2009
29 Jun 2009
30 Jun 2009
03 Jun 2009
1.1700
1.0950
0.8100
0.7200
0.9900
0.9900
1.6450
1.6200
1.6250
1.7250
1.6700
1.6000
1.8300
1.8300
1.7900
1.7000
0
1
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75
Notes to the Financial Statements
for the financial year ended 30 June 2010
d) Balance at the end of the financial year
Options Series
Number
Grant Date
Expiry /
Exercise Date
Exercise
Price
A$
Fair Value at
Grant Date
A$
Series 5
Series 13
Series 14
Series 17
Series 18
Series 19
Series 20
100,000
31 Oct 2005
31 Oct 2010
1,120,000
16 Apr 2008
16 Apr 2011
250,000
25 Aug 2008
25 Aug 2011
1,000,000
19 Dec 2008
19 Dec 2011
1,630,150
15 Apr 2009
31 Dec 2012
350,000
06 Aug 2009
06 Aug 2012
500,000
28 Nov 2009
28 Nov 2010
4,950,150
0.3500
1.7022
1.1999
1.0000
1.2000
1.8658
1.5000
0.1753
0.4015
0.3070
0.3568
0.4326
0.8113
0.9862
The weighted average remaining contractual life of options outstanding is 569 days (2009: 679 days).
29. Share warrants
The following share warrants were in existence during the current and comparative reporting periods:-
Warrants Series
Number
Grant Date
Expiry Date
Exercise
Price
C$
Fair Value at
Grant Date
A$
Series 4
Series 5
Series 6
Series 7
4,770,720
10 Jan 2008
23 Nov 2009
4,636,990
10 Feb 2009
10 Feb 2011
788,437
16 Jul 2009
16 Jul 2011
161,563
26 Aug 2009
26 Aug 2011
1.2000
0.6500
1.5600
1.5200
0.3782
0.4288
0.6601
0.5895
10,357,710
Share warrants are identical in nature to share options however they are differentiated as such because the latter in Canada
typically relates to options issued to employees under employee option plans.
The weighted average fair value of the share warrants granted during the financial year was A$0.6481 (2009: A$0.4288).
The share warrants granted have been valued internally by the Company using the Black and Scholes option pricing method.
Warrants were offered to the Company’s share broker in Canada as part of the equity raising process during the current and
prior years. The weighted average closing price of the shares in Centamin Egypt Limited for the financial year was C$2.03
(2009: A$1.06). The volatility input into the model was 75.00% based on the historical share price volatility over the past 3
years (2009: 70.00%) and the government rate similar to the term of the option used was 5.75% (2009: 4.02%).
Series 1
Series 2
Series 3
Series 4
Series 5
Broker Warrant Series
Grant date share price
A$1.0100
A$0.9700
A$0.9900
A$1.4900
A$1.0700
Exercise price
Expected volatility
Option life
Dividend yield
Risk-free interest rate
A$0.9133
A$0.9097
A$0.9137
A$1.3532
A$0.7888
60.00%
60.00%
60.00%
52.00%
70%
2 year term
2 year term
2 year term
2 year term
2 year term
0.00
5.50%
0.00
5.50%
0.00
5.50%
0.00
5.84%
0.00
4.02%
76
Series 6
Series 7
Broker Warrant Series
Grant date share price
A$1.7900
A$1.6850
Exercise price
Expected volatility
Option life
Dividend yield
Risk-free interest rate
C$1.5600
C$1.5200
75.00%
2 years
0.00
5.75%
75.00%
2 years
0.00
5.75%
The following reconciles the outstanding share warrants at the beginning and end of the financial year:
2010
2009
Number of
warrants
9,407,710
950,000
(10,357,710)
-
-
-
-
Weighted
average exercise
price C$
0.9425
1.5532
0.9862
-
-
-
-
-
-
Number of
warrants
9,607,260
5,307,710
(5,507,260)
9,407,710
9,407,710
Weighted
average exercise
price C$
-
-
1.0582
0.6500
1.1463
0.9425
0.9425
Balance at beginning of financial year
Granted during the financial year (a)
Forfeited during the financial year
Exercised during the financial year (b)
Expired during the financial year
Balance at the end of the financial year (c)
Exercisable at the end of the financial year
a) Granted during the financial year
Broker Warrants Series
Number
Grant date
Expiry Date
Series 6
Series 7
788,437
16 Jul 2009
16 Jul 2011
161,563
26 Aug 2009
26 Aug 2011
950,000
b) Exercised during the financial year
Exercise
Price
C$
1.5600
1.5200
Fair Value at
Grant Date
A$
0.6601
0.5895
2010 Broker Warrants - Series
Number Exercised
Exercise Date
Share Price at Exercise Date C$
Series 4
Series 5
Series 6
Series 7
329,280
500,000
500,000
500,000
500,000
500,000
500,000
453,040
988,400
665,000
1,330,000
658,855
1,983,135
788,437
161,563
10,357,710
06 Jul 2009
28 Jul 2009
04 Sep 2009
15 Sep 2009
23 Sep 2009
07 Oct 2009
23 Oct 2009
26 Oct 2009
23 Nov 2009
07 May 2010
12 May 2010
14 May 2010
28 Oct 2009
18 Jun 2010
23 Jun 2010
1.5900
1.5700
1.7700
1.7800
1.7300
1.7900
2.3000
2.1400
2.3600
2.3200
2.4600
2.4200
2.1100
2.5500
2.5000
0
1
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2
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77
Notes to the Financial Statements
for the financial year ended 30 June 2010
2009 Broker Warrants - Series
Number Exercised
Exercise Date
Share Price at Exercise Date A$
Series 2
Series 3
Series 4
Series 5
1,000,000
500,000
500,000
305,000
61,300
893,678
133,700
613,582
329,280
500,000
670,720
5,507,260
20 Mar 2009
23 Mar 2009
25 Mar 2009
27 Mar 2009
31 Mar 2009
03 Apr 2009
06 Apr 2009
14 Apr 2009
26 May 2009
25 Jun 2009
26 May 2009
1.1350
1.1250
1.0750
1.2600
1.3000
1.1900
1.1500
1.1850
1.6400
1.8500
1.6400
c) Balance at the end of the financial year
There were no broker warrants on issue at 30 June 2010.
30. Key management personnel compensation
The aggregate compensation made to key management personnel of the consolidated entity and the Company is set
out below:-
Consolidated
Company
2010
A$
2,390,358
37,927
87,889
356,054
2,872,228
2009
A$
2,295,071
51,345
25,408
426,039
2,797,863
2010
A$
2009
A$
614,179
415,162
-
-
-
87,889
702,068
25,408
61,888
502,458
Short-term employee benefits
Long-term employee benefits
Post-employment benefits
Share-based payments
Total
Note: disclosure made in whole dollars
31. Related party transactions
a) Equity interests in related parties
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in subsidiaries are disclosed in Note 22 to the financial statements.
Equity interests in associates and joint ventures
Details of interests in joint ventures are disclosed in Note 24 to the financial statements.
b) Key management personnel compensation
Details of key management personnel compensation are disclosed in Note 30 to the financial statements.
78
c) Key management personnel equity holdings
The details of the movement in key management personnel equity holdings of fully paid ordinary shares in Centamin Egypt
Limited during the financial year are as follows:-
2010
C Cowden
J El-Raghy (1)
H S Bottomley
T Elder
H Michael
M Di Silvio
H Brown
2009
Balance at
01 July 09
1,203,626
79,185,754
2,900,000
250,000
200,000
Balance at
01 July 08
-
-
S El-Raghy (1)(3)
78,235,754
C Cowden
J El-Raghy (1)
H S Bottomley
T Elder
G Speechly (3)
H Brown
603,626
79,185,754
2,800,000
250,000
250,000
400,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
30 June 10
1,203,626
Granted
as
Remuneration
Received on
Exercise of
Options
Net Other
Change (2)
Granted
as
Remuneration
-
-
-
-
-
-
-
Received on
Exercise of
Options
500,000
500,000
-
-
-
-
-
-
-
-
-
-
-
-
(9,990,668)
69,195,086
(250,000)
2,650,000
250,000
75,000
75,000
(200,000)
-
-
Net Other
Change (2)
Balance at
30 June 09
78,235,754
100,000
1,203,626
79,185,754
(400,000)
2,900,000
250,000
250,000
200,000
(200,000)
Balance
Held
Nominally
Balance
Held
Nominally
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) The total shares held by Mr S El-Raghy and Mr J El-Raghy arise due to them both having a controlling interest in the securities of the
following entities: Nordana Pty Ltd 4,990,668 shares, Nordana Pty Ltd 17,595,714 shares, El-Raghy Kriewaldt Pty Ltd
55,299,372 shares, S & M El-Raghy 350,000 shares. The balance of 950,000 shares are held by Mr J El-
Raghy in the name of Montana Superannuation Pty Ltd .
(2) ‘Net other change’ relates to the on market acquisition or disposal of fully paid ordinary share.
(3) Mr S El-Raghy and Mr G Speechly retired from the Board on 31 December 2009.
d) Key management personnel share option holdings
The details of the movement in key management personnel options to acquire ordinary shares in Centamin Egypt Limited are
as follows:-
Balance at
01 July 09
Granted
as
Remuneration
Exercised
Other
Changes
Balance at
30 June 10
Balance
Vested
During
the Year
Balance
Vested and
Exerciseable
at 30 June 10
-
-
-
-
1,000,000 -
-
-
-
-
-
-
-
-
-
-
-
250,000
350,000 -
250,000 -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
1,000,000
600,000
300,000
250,000 -
425,000
250,000
2010
S El-Raghy
C Cowden
G Speechly
T Elder
T Schultz
J El-Raghy
H Bottomley
H Michael
M Di Silvio
H Brown
-
-
-
-
-
-
-
0
1
0
2
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Notes to the Financial Statements
for the financial year ended 30 June 2010
Balance at
01 July 08
Granted
as
Remuneration
2009
S El-Raghy
C Cowden
G Speechly
T Elder (1)
T Schultz
J El-Raghy
H Bottomley
H Brown
-
-
-
-
-
500,000 -
-
500,000 -
-
500,000 -
250,000 -
Exercised
(500,000)
-
-
-
1,000,000 -
-
-
(500,000)
M Smith (2)
1,000,000 -
(500,000)
M Di Silvio
-
250,000 -
Other
Changes
Balance at
30 June 09
Balance
Vested
During
the Year
Balance
Vested and
Exerciseable
at 30 June 09
-
-
-
-
-
-
-
-
*(500,000)
-
-
-
-
-
-
1,000,000
250,000
*(500,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
250,000
500,000
250,000
250,000
125,000
125,000
(1) T Elder’s options expired on 08 December 2008.
(2) Mark Smith resigned on 07 August 2008. Other change of (500,000) represents options lapsed due to Mr Smith ceasing employment with
the Company prior to the vesting date of these options.
Apart from the details disclosed in this note, no key management personnel has entered into a material contract with the
Company or the economic entity since the end of the previous financial year and there were no material contracts involving key
management personnel interests at year-end.
e) Other transactions with key management personnel
The related party transactions for financial year ended 30 June 2010 are summarised below:
Mr J El-Raghy and Mr S El-Raghy are directors and shareholders of El-Raghy Kriewaldt Pty Ltd (“El-Raghy Kriewaldt”).
El-Raghy Kriewaldt provides office premises to the Company. All dealings with El-Raghy Kriewaldt are in the ordinary course
of business and on normal terms and conditions. Rent and office outgoings paid to El-Raghy Kriewaldt during the year were
A$66,274 (2009: A$64,475). Mr S El-Raghy retired as a director of Centamin Egypt Limited on 31 December 2009.
Mr S El-Raghy provides office premises to the Company in Alexandria, Egypt. All dealings are in the ordinary course of business
and on normal terms and conditions. Mr S El-Raghy retired as a director of Centamin Egypt Limited on 31 December 2009.
Rent paid for the six months to 31 December 2009 amounted to GBP 3,900 (Full year ended 30 June 2009: GBP 7,800).
A director of the Company, Mr C Cowden has an interest as a director and shareholder of Cowden Limited Insurance Brokers.
This company provides insurance broking services to the Company. All dealings with this company are in the ordinary course
of business and on normal terms and conditions. Cowden Limited was paid A$73,481 during the year (2009: A$51,977)
for these services. In addition, amounts of A$443,529 (2009: A$320,428) were paid to Cowden Limited to be passed on to
underwriters for premiums during the year.
f)
Transactions with other related parties
Other related parties include the parent entity, subsidiaries, and other related parties.
During the prior financial year, the Company recognised tax payable in respect of the tax liabilities of its wholly owned
subsidiaries. Payments to/from the Company are made in accordance with terms of the tax funding arrangement.
During the year the Company provided funds to and received funding from subsidiaries. Current loans totalling $426,293,000
(2009: $340,092,000) are repayable to the Company by subsidiaries.
All amounts advanced to related parties are unsecured. No expense has been recognised in the period for bad or doubtful
debts in respect of amounts owed by related parties.
Transactions and balances between the Company and its subsidiaries were eliminated in the preparation of consolidated
financial statements of the Group.
32. Subsequent events
There were no events subsequent to balance date requiring disclosure.
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82
ABN 86 007 700 352
AUSTRALIA
57 Kishorn Road, Mount Pleasant
Western Australia 6153
T: +61 8 9316 2640
F: +61 8 9316 2650
EGYPT
361 EI-Horreya Road, Sedi Gaber
Alexandria, Egypt
T: +203 5411 259
F: +203 5226 350