European Goldfields: Results for 2005; Commenced Production at Stratoni.WHITEHORSE Whitehorse, city (1991 pop. 17,925), S Yukon, Canada, on the Yukon River. Since 1952 it has been the territorial capital. Whitehorse is on the Alaska Highway and was the terminus of the White Pass and Yukon Railway from Skagway, Alaska, which suspended service in , Yukon Yukon (y  `kŏn), river, c.2,000 mi (3,220 km) long, rising in Atlin Lake, NW British Columbia, Canada, and receiving numerous headwater streams; one of the longest rivers of North America. -- European Europeanemanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. Goldfields n. 1. A small slender woolly annual (Lasthenia chrysostoma) with very narrow opposite leaves and branches bearing solitary golden-yellow flower heads; it grows from Southwestern Oregon to Baja California and Arizona; - it is often cultivated. Limited (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :EGU EGU European Geosciences Union EGU English Golf Union EGU Electrical Generating Unit EGU Engineering unit EGU Epidemiology & Genetics Unit )(AIM:EGU) - INAUGURAL GROSS PROFIT IN GREECE Greece, Gr. Hellas or Ellas, republic (2005 est. pop. 10,668,000), 50,944 sq mi (131,945 sq km), SE Europe. It occupies the southernmost part of the Balkan Peninsula and borders on the Ionian Sea in the west, on the Mediterranean Sea in the south, on FOR Q4 2005 BUSINESS PLANS COMPLETED FOR OLYMPIAS Olympias, d. 316 B.C., wife of Philip II of Macedon and mother of Alexander the Great. She did not get on well with Philip, who had other wives, but the story that she murdered him is probably false. & SKOURIES CERTEJ PROJECT MOVING FORWARD European Goldfields Limited (TSX:EGU)(AIM:EGU) ("European Goldfields" or the "Company") today reports its results for the financial year ended 31 December December: see month. 2005. Highlights of the year are: Greece: - Commenced production at Stratoni in October October: see month. 2005 - Hellas Hellas: see Greece. Gold awarded all environmental and mining permits for its Stratoni mine; plant commissioned in September September: see month. 2005, underground mining commenced in late October, off-take agreements signed in November November: see month. and first concentrates shipped in December - Hellas Gold records inaugural gross profit for Q4 2005; first revenue booked in December 2005 from sale of Stratoni concentrates - Work progressing on new Stratoni decline, leading to production ramp-up in 2007 - Business plans submitted to the Greek In desktop publishing, to display text in a representative form in which the actual letters are not discernible, because the screen resolution isn't high enough to display them properly. The software lets you set which font sizes should be greeked. government in January January: see month. 2006, the first major step in applying for permits to develop major projects of Skouries and Olympias - Increased Stratoni reserve by 17% Romania Romania (rōmān`ēə, –yə) or Rumania (r –), republic (v), 91,699 sq mi (237,500 sq km), SE Europe. :- In-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. pre-feasibility study on Certej completed, confirming that a high-grade High-grade Credit quality of AAA or AA. high-grade Of, relating to, or being a bond with little risk of default on the part of the issuer. High-grade is usually reserved for bonds rated AAA or AA by the rating services. gold/silver concentrate can be produced at a gold recovery of greater than 87% from open-pit mining Open-pit mining, also known as opencast mining, refers to a method of extracting rock or minerals from the earth by their removal from an open pit or borrow. - Letters of interest received for sale of Certej gold/silver concentrate - Environmental Impact Assessments completed - Promising exploration results on Certej satellites; joint venture signed for the exploration of a new mining concession in Romania at Magura Tebii Corporate: - Management team-building completed with appointments of Neil Hepworth as VP Operations and Jeff O'Leary as Non-executive Director A non-executive director (NED, also NXD) or outside director is a member of the board of directors of a company who does not form part of the executive management team. He or she is not an employee of the company or affiliated with it in any other way. - Loss for 2005 down by almost 50% compared to 2004; US$34 million in cash assets and financial instruments at 31 December 2005; funded through 2007 until permits awarded for Olympias, Skouries and Certej - Increased analyst coverage; broadened shareholder base and improved share liquidity; appointed Williams de Broe and RBC Capital Markets RBC Capital Markets is the corporate and investment banking division of Royal Bank of Canada ("RBC"). Broker dealers Depending on the jurisdiction, the division uses different broker dealer subsidiaries of RBC:
Commenting on the results, David Reading Professor Sir David Read FRS is Emiritus Professor of Plant Science in the Department of Animal and Plant Sciences at University of Sheffield. His first degree and PhD came from University of Hull, the latter in 1963. , Chief Executive Officer of European Goldfields, said: "European Goldfields had a successful year in its evolution to a mid-tier producer by delivering on its promises in 2005: production from our base metal mine at Stratoni commenced in late October, cash flow has been secured through off-take agreements for the sale of concentrates produced at Stratoni, business plans were submitted to the Greek government for the development of the major gold and base metals projects of Skouries and Olympias, and the in-house pre-feasibility study on the Certej deposit in Romania was completed, demonstrating the viability of the project. These events have created the platform for European Goldfields to become one of Europe's most significant mining and development companies." Stratoni underpins the value The year 2005 was a busy one at the Stratoni mine. Refurbishment re·fur·bish tr.v. re·fur·bished, re·fur·bish·ing, re·fur·bish·es To make clean, bright, or fresh again; renovate. re·fur of existing underground, plant and port facilities was completed by mid year and by September all the necessary environmental and mining permits were received. The mill and flotation flotation or froth flotation Most widely used process for extracting many minerals from their ores. The method separates and concentrates ores by altering their surfaces so that they are either repelled or attracted by water. plant was successfully commissioned in the same month and by late October we were in the position to start underground mining operations. During the two months to the end of December, the Stratoni plant processed over 16,000 tonnes of ore and a further 11,000 remained on the stockpile stock·pile n. A supply stored for future use, usually carefully accrued and maintained. tr.v. stock·piled, stock·pil·ing, stock·piles To accumulate and maintain a supply of for future use. . In December, some 2,500 tonnes of concentrates grading 52% zinc zinc, metallic chemical element; symbol Zn; at. no. 30; at. wt. 65.38; m.p. 419.58°C;; b.p. 907°C;; sp. gr. 7.133 at 25°C;; valence +2. Zinc is a lustrous bluish-white metal. It is found in Group 12 of the periodic table. was shipped and sold. The modest Stratoni figures represent a promising start as over ten working ends were opened up and the underground infrastructure was repaired and equipped in order to increase production. This preparatory pre·par·a·to·ry adj. 1. Serving to make ready or prepare; introductory. See Synonyms at preliminary. 2. Relating to or engaged in study or training that serves as preparation for advanced education: work has facilitated a solid platform for production build-up build·up also build-up n. 1. The act or process of amassing or increasing: a military buildup; a buildup of tension during the strike. 2. , which saw us move from 300 tonnes per day (tpd) in December to 400 tpd in January and 500 tpd in March 2006. Furthermore, the plant was commissioned without any technical problems, and optimum recoveries of above 90% are now being achieved. Good progress has also been made on the new decline, which is now 130 metres in, and through the bad ground associated with the footwall foot·wall n. Geology 1. The mass of rock underlying a mineral deposit in a mine. 2. The underlying block of a fault having an inclined fault plane. fault zone. The decline is not necessary for mining in 2006 but becomes critical for the future production ramp-up involving the deeper portions of the orebody as well as providing potential exploration upside Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside . The ore production forecast for 2006 is 170,000 tonnes, which is expected to increase steadily thereafter up to a maximum of 400,000 tonnes per annum Per annum Yearly. . The Stratoni project underpins the value of the Company. Off-take agreements for the sale of concentrates have been signed and secure our sales until mid 2008. The Company negotiated very favourable terms which included some of the lowest treatment charges on record. This reflects the fact that Stratoni is the only new zinc and lead producer to come on stream in 2005 and coincides with a strong upturn in the prices of these metals. The fourth-quarter results for our 65% Greek subsidiary, Hellas Gold, reflect this robustness with the announcement of an inaugural gross profit for the quarter. In summary, Stratoni is a robust business with minimal capital investment due the extensive existing infrastructure and also has well-defined reserves over a six-year life. The project has exciting exploration upside as the orebody is open in all directions and the new decline is transgressing the zone between old, mined-out areas and the current reserve. All these areas will be the subject to new exploration drilling during the forthcoming year. Permit process for gold projects commences with submission of business plans In January 2006, Hellas Gold submitted business plans to the Greek government for the major gold and base metals projects of Skouries and Olympias, effectively starting the permitting process for these mines. The emphasis is on a phased approach for capital and project development, with priority assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to full production from the Skouries copper - gold project. At Olympias, the initial development is designed to utilise existing infrastructure and focus on the sale of concentrates with production ramp-up and building of a gold plant occurring in later years. The phased strategy reflects cognizance The power, authority, and ability of a judge to determine a particular legal matter. A judge's decision to take note of or deal with a cause. That which is cognizable to a judge is within the scope of his or her jurisdiction. of project history, a practical approach to project building and takes into account the concerns and issues of local stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. . The submission of these plans is a major milestone in the Company's history involving the collaboration Working together on a project. See collaborative software. of our Greek and London teams, as well as extensive input from external consultants. Skouries is a robust project at copper prices of $1.06/lb and gold at $400/oz. The project has simple metallurgy metallurgy (mĕt`əlûr'jē), science and technology of metals and their alloys. Modern metallurgical research is concerned with the preparation of radioactive metals, with obtaining metals economically from low-grade ores, with and a low strip ratio, with open-pit mining followed by underground development. Skouries will produce some 750,000 tonnes of copper metal and 3.6 Moz of gold over a 20-year life. Skouries is located on an uninhabited, high plateau plateau, elevated, level or nearly level portion of the earth's surface, larger in summit area than a mountain and bounded on at least one side by steep slopes, occurring on land or in oceans. , but close to roads, power and water infrastructures. The latest paste production technology has been incorporated in the tailings Tailings (also known as tailings pile, tails, leach residue, or slickens[1]) are the materials left over[2] after the process of separating the valuable fraction from the worthless fraction of an ore. management facility to minimise and control active waste areas. The Skouries project is well researched, and updating the bankable bank·a·ble adj. 1. Acceptable to or at a bank: bankable funds. 2. Guaranteed to bring profit: a bankable movie star. feasibility study The analysis of a problem to determine if it can be solved effectively. The operational (will it work?), economical (costs and benefits) and technical (can it be built?) aspects are part of the study. Results of the study determine whether the solution should be implemented. will be straightforward and achievable during 2006. We believe that on receipt of the permits the project can be built in approximately 18 months. Olympias has two distinct advantages: existing shaft shaft (shaft) a long slender part, such as the diaphysis of a long bone. shaft n. 1. An elongated rodlike structure, such as the midsection of a long bone. 2. and underground infrastructure down to a depth of 400 metres below surface, and stockpiles of gold concentrates (270,000 tonnes grading +20 g/t gold), which we intend to sell as soon as possible, some in 2006. The business plan is phased with underground production expected to commence at 250,000 tonnes per annum (tpa) and ramping-up to 900,000 tpa over eight years. The sale of surface stockpiles will generate early cash flow and the plan is to continue selling gold and base metal concentrates during the production ramp-up. In the final phase, a new decline will be used to convey ore to a plant complex involving concentrator, gold plant and tailings management facility that will be centralised Adj. 1. centralised - drawn toward a center or brought under the control of a central authority; "centralized control of emergency relief efforts"; "centralized government" centralized in the Stratoni valley. The phasing of the project allows time for optimisation Noun 1. optimisation - the act of rendering optimal; "the simultaneous optimization of growth and profitability"; "in an optimization problem we seek values of the variables that lead to an optimal value of the function that is to be optimized"; "to promote the and development of the metallurgical met·al·lur·gy n. 1. The science that deals with procedures used in extracting metals from their ores, purifying and alloying metals, and creating useful objects from metals. 2. process for the treatment of auriferous au·rif·er·ous adj. Containing gold; gold-bearing. [From Latin aurifer, gold-bearing : aurum, gold + -fer, -fer. arsenopyrite/pyrite concentrates, as this is still in the research and development stage. Submission of the business plans is a significant milestone in the Company's development as it effectively engages the Greek government and the local communities in our development plans for the projects, and starts the clock on countdown to receiving the necessary permits to commence mining. Turning the corner in Romania In 2005, the Romanian exploration and feasibility team took great steps towards project development by understanding the grade, mining potential and metallurgy of our Certej gold project. A promising in-house pre-feasibility study was completed showing that Certej could produce a viable return at a gold price of $425/oz and above by way of open-pit mining and production of high-grade concentrates, which could be sold commercially or oxidised Adj. 1. oxidised - combined with or having undergone a chemical reaction with oxygen; "the oxidized form of iodine" oxidized on site to produce gold dore. With this study, the project has now turned the corner. We are now completing a final feasibility study for submission to the Romanian government in support of our permit application. We have completed final pit optimisation studies based on new geotechnical drilling and levels I and II of the Environmental Impact Assessment have been completed. We have also received letters of interest from metal traders Traders Individuals who take positions in securities and their derivatives with the objective of making profits. Traders can make markets by trading the flow. When they do this, their objective is to earn the bid/ask spread. for the Certej concentrate, which will enable us to file for project reserves in Q2 2006. On the exploration front, our teams continue to evaluate satellite targets surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. Certej, and encouraging results to date suggest we can probably supply additional gold ounces to the Certej project. The Company has also entered into a JV agreement with a local Romanian company to drill-test the Magura Tebii prospect, an attractive exploration target located 35 km north-west of Certej. European Goldfields: a mining and development company Many of our longstanding shareholders have remarked that European Goldfields is a very different company from the one that they knew over two years ago. This statement is endorsed by the instalment of new management and technical teams, our project pipeline, the commencement of production and revenue-generation, our strong cash position and reduction in expenditure, and finally the broadening of our shareholder base and improvement in share liquidity during the second half of 2006. All these events have transformed the Company into a mining and development group that is on track to become a mid-tier producer by the end of 2008. In addition to Hellas Gold's inaugural gross profit for Q4 2005, we are also pleased to report that European Goldfields' loss for 2005 was down by almost 50% compared to 2004, reflecting the Company's increasing control over costs and better management of assets. The Company also had US$34 million in cash assets and financial instruments at 31 December 2005, which is expected to provide funding through 2007, covering the permitting process for Olympias, Skouries and Certej. 2006 and beyond: a new commodity cycle The forthcoming year is a very important one for European Goldfields. Our production team in Greece is focused on mining and processing 170,000 tons of ore from Stratoni and completing the new decline. Subsequent to submission of the business plans for the major gold and base metal projects of Skouries and Olympias, we are now in the permitting process and currently preparing our Environmental Impact Assessment. In parallel with this work, we will be updating the Skouries feasibility study and completing our final mining studies for Olympias. Our view on permitting is that we have successfully completed this process once for Stratoni, and will be dealing with all of the same government and local stakeholders again for the Skouries and Olympias projects. In Romania, considerable progress has been made in the completion of the pit optimisation and metallurgical studies in order to file for reserves. Work continues on the forthcoming submission of a final feasibility study to the government so that we can begin the permitting process on the Certej project. The Company's project pipeline gives many value-creating opportunities within the current commodity cycle. These include the ability to sell our stockpile of gold concentrates at Olympias (270,000 tonnes grading +20 g/t gold) and the opportunity to immediately monetise a portion of our Stratoni silver reserve. We are currently aggressively pursuing these opportunities in order to give ourselves flexibility in the financing of the Skouries and Olympias projects. In 2006, we will also initiate a focused exploration programme at Stratoni to define further resources within ore-bearing marble horizons between the two known deposits and around the peripheries of the existing reserves. In addition to this, we have also initiated a generative gen·er·a·tive adj. 1. Having the ability to originate, produce, or procreate. 2. Of or relating to the production of offspring. generative pertaining to reproduction. study to outline targets for follow-up follow-up, n the process of monitoring the progress of a patient after a period of active treatment. follow-up subsequent. follow-up plan exploration. This work will form a solid platform for brown field exploration for further major Olympias and Skouries-style deposits in 2007 within our 317 km2 of highly prospective permits in northern Greece. In summary, the Company now has a clear strategic direction with a management team capable of delivering on our promises. It is a great time to be a silver, zinc and lead producer and the revenue-generation provides a strong platform for further project development. European Goldfields is now well on the way to achieving its mission statement and becoming a mid-tier, gold and base metals producer within South-East Europe by the end of 2008. Resources & reserves parameters For additional information on the resource and reserve estimates quoted in this news release, please refer to the Company's Resources & Reserves Declaration at www.egoldfields.com/goldfields/resources.jsp. Patrick Forward, General Manager, Exploration of the Company, was the Qualified Person under Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. National Instrument 43-101 responsible for reviewing the disclosure of resource and reserve estimates quoted in this news release. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain information included in this news release, including any information as to the Company's future financial or operating performance and other statements that express management's expectations or estimates of future performance, constitute "forward-looking statements". The words "expect", "will", "intend", "estimate" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. . The Company cautions the reader that such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of the Company to be materially different from its estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. These risks, uncertainties and other factors include, but are not limited to: changes in the worldwide price of gold, base metals or certain other commodities (such as fuel and electricity) and currencies; the successful and timely permitting of the Company's Skouries, Olympias and Certej projects; legislative, political, social or economic developments in the jurisdictions in which the Company carries on business; operating or technical difficulties in connection with mining or development activities; the speculative nature of gold and base metals exploration and development, including the risks of diminishing di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. quantities or grades of reserves; and the risks normally involved in the exploration, development and mining business. These factors are discussed in greater detail in the Company's Annual Information Form for the year ended 31 December 2005, filed on SEDAR SEDAR System for Electronic Document Analysis and Retrieval SEDAR Southeast Data, Assessment, and Review at www.sedar.com. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. MANAGEMENT'S DISCUSSION AND ANALYSIS Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial FOR THE YEAR ENDED 31 DECEMBER 2005 The following discussion and analysis, prepared as at 29 March 2006, is intended to assist in the understanding and assessment of the trends and significant changes in the results of operations and financial conditions of European Goldfields Limited (the "Company"). Historical results may not indicate future performance. Forward-looking statements are subject to a variety of factors that could cause actual results to differ materially from those contemplated by these statements. The following discussion and analysis should be read in conjunction with the Company's audited consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge for the years ended 31 December 2005 and 2004 and accompanying notes (the "Consolidated Financial Statements"). Additional information relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company, including the Company's Annual Information Form, is available on the Canadian System for Electronic Document Analysis and Retrieval The System for Electronic Document Analysis and Retrieval (SEDAR) is a mandatory document filing and retrieval system for Canadian public companies. Similar to EDGAR, SEDAR is operated by the Canadian Securities Administrators, a coordinating body comprising the 13 Canadian (SEDAR) at www.sedar.com. Except as otherwise noted, all dollar amounts in the following discussion and analysis and the Consolidated Financial Statements are stated in United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. dollars. Overview The Company, a company incorporated under the Yukon Business Corporations Act, is a resource company involved in the acquisition, exploration and development of mineral properties in Greece, Romania and the Balkans. The Company's Common Shares are listed on the AIM Market of the London Stock Exchange London Stock Exchange London marketplace for securities. It was formed in 1773 by a group of stockbrokers who had been doing business informally in local coffeehouses. and on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. (TSX) under the symbol "EGU". Greece - The Company holds a 65% interest in Hellas Gold S.A. ("Hellas Gold"). Hellas Gold owns assets in northern Greece which consist of three deposits within 70-year mining concessions covering a total area of 317 km2. The deposits include the polymetallic projects of Stratoni and Olympias which contain gold, lead, zinc and silver, and the copper/gold porphyry Porphyry, Greek scholar Porphyry (pôr`fĭrē), c.232–c.304, Greek scholar and Neoplatonic philosopher. He studied rhetoric under Cassius Longinus and philosophy under Plotinus. body referred to as Skouries. All three deposits have been well defined with over 200,000 metres of drilling and the completion of feasibility studies and later engineering studies. The total proven and probable reserves of these assets are 7.6 Moz gold, 65.8 Moz silver, 0.7 Mt copper, 0.7 Mt lead and 0.9 Mt zinc, from a measured and indicated resource base of 9.4 Moz gold, 74.5 Moz silver, 1.0 Mt copper, 0.8 Mt lead and 1.1 Mt zinc (65% attributable). These assets represent some of the largest defined deposits in Europe. The three deposits are located within a 10 km radius of each other, making this effectively a gold and base metals centre. Furthermore, both Stratoni and Olympias were previously in production and have extensive existing mining and plant infrastructure and a ship-loading facility on the Aegean Sea Aegean Sea, Gr. Aigaion Pelagos, Turkish Ege Denizi, arm of the Mediterranean Sea, c.400 mi (640 km) long and 200 mi (320 km) wide, off SE Europe between Greece and Turkey; Crete and Rhodes mark its southern limit. . Hellas Gold's assets also include potential revenue-generating stockpiles of gold concentrates. In September 2005, Hellas Gold resumed production at Stratoni following the award by the Greek State of all necessary environmental and mining permits. Hellas Gold is in the process of applying for similar permits for Olympias and Skouries, having met its first milestone by submitting business plans to the Greek government in January 2006. Romania - The Company holds five mineral properties located within the "Golden Quadrilateral The Golden Quadrilateral (GQ) is the largest express highway project in India launched by Sri Atal Bihari Vajpayee, former prime minister of India. It is the first phase of the National Highways Development Project (NHDP), and consists of building 5,846 kilometres of four/six lane " area of Romania, where it has recently completed an in-house pre-feasibility study underpinning un·der·pin·ning n. 1. Material or masonry used to support a structure, such as a wall. 2. A support or foundation. Often used in the plural. 3. Informal The human legs. Often used in the plural. the value of its 80%-owned Certej deposit. The Certej deposit hosts measured and indicated resources of 31.4 Mt grading 2.1 g/t gold and 11 g/t silver for 2.2 Moz gold and 11.0 Moz silver (80% attributable). Results of operations The Company's results of operations for the year and three-month period ended 31 December 2005 were comprised primarily of activities related to the results of operations of the Company's 65%-owned subsidiary Hellas Gold in Greece and the Company's regional exploration programs in Romania. The Company currently incurs losses and until significant revenues are generated, the Company will continue to do so. In September 2005, Hellas Gold commenced production at its Stratoni mine in Greece. The following table summarises operational results at Stratoni for the three-month period ended 31 December 2005.
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Stratoni Mine (Greece)
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Three-month period ended
31 December 2005
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Production
Start of period inventory of ore mined (tonnes) 13,188
Ore mined (tonnes) 13,800
Ore processed (tonnes) 16,025
- Average grade: Zinc (%) 7.80
Lead (%) 7.10
Silver (g/t) 182
Zinc concentrate (tonnes) 2,385
- Containing: Zinc (tonnes) 1,254
Lead concentrate (tonnes) 1,268
- Containing: Lead (tonnes) 907
Silver (kg) 2,284
End of period inventory of ore mined (tonnes) 10,963
Sales
Zinc concentrate (tonnes) 2,290
- Containing: Zinc (tonnes)(i) 1,009
Lead concentrate (tonnes) Nil
- Containing: Lead (tonnes)(i) Nil
Silver (kg)(i) Nil
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(i) Net of smelter deductions
The Company's results of operations for the eight most recently
completed quarters are summarised in the following table:
---------------------------------------------------------------------
2005 2005 2005 2005
(in thousands of US dollars, Q4 Q3 Q2 Q1
except per share amounts) $ $ $ $
---------------------------------------------------------------------
Statement of loss and deficit
Sales 1,464 - 57 -
Cost of sales 1,367 - - -
Gross profit 97 - 57 -
Interest income 339 272 326 326
Expenses 5,079 3,536 2,287 3,831
Loss 4,309 2,726 723 2,652
Loss per share 0.04 0.02 0.01 0.02
Balance sheet
Working capital 33,765 39,171 49,544 57,285
Total assets 266,618 295,914 298,948 300,689
Non current liabilities 62,807 70,053 71,056 71,179
Statement of cash flows
Deferred exploration and
development costs - Romania 1,081 1,067 893 860
Plant and equipment - Greece 1,298 2,506 2,453 1,582
Deferred development costs
- Greece 1,510 439 891 -
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2004 2004 2004 2004
(in thousands of US dollars, Q4 Q3 Q2 Q1
except per share amounts) $ $ $ $
---------------------------------------------------------------------
Statement of loss and deficit
Sales - - - -
Cost of sales - - - -
Gross profit - - - -
Interest income 279 143 60 18
Expenses 9,225 2,854 2,848 5,042
Loss 8,134 2,190 3,580 5,279
Loss per share 0.17 0.05 0.09 0.18
Balance sheet
Working capital 63,480 29,045 31,117 14,413
Total assets 305,541 86,879 83,517 67,875
Non current liabilities 72,103 - - -
Statement of cash flows
Deferred exploration and
development costs - Romania 2,462 1,172 943 1,394
Plant and equipment - Greece - - - -
Deferred development costs
- Greece - - - -
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The Company's results of operations for the years ended 31 December 2005, 2004 and 2003, and the three-month periods ended 31 December 2005 and 2004 are summarised in the following table:
Years ended 31 December Three-month periods
ended 31 December
-----------------------------------------------
(in thousands of 2005 2004 2003 2005 2004
US dollars) $ $ $ $ $
---------------------------------------------------------------------
Statement of loss
and deficit
Sales 1,521 - - 1,464 -
Cost of sales 1,367 - - 1,367 -
Gross profit 154 - - 97 -
Interest Income 1,263 500 170 339 279
Expenses 14,733 19,969 2,627 5,079 9,224
Loss 10,410 19,183 2,457 4,309 8,134
Loss per share 0.09 0.39 0.11 0.04 0.17
Balance sheet
Working capital 33,765 63,480 5,058 33,765 63,480
Total assets 266,618 305,541 45,943 266,618 305,541
Non current
liabilities 62,807 72,103 - 62,807 72,103
Statement of
cash flows
Deferred
exploration
and development
costs - Romania 3,901 5,971 4,257 1,081 2,462
Plant and equipment
- Greece 7,839 - - 1,298 -
Deferred development
costs - Greece 2,840 - - 1,510 -
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The breakdown of deferred exploration and development costs per mineral property for the years ended 31 December 2005, 2004 and 2003, and the three-month periods ended 31 December 2005 and 2004 is as follows:
Years ended 31 December
-----------------------------------------------
(in thousands of 2005 2004 2003
US dollars) $ $ $
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Romanian mineral
properties
Certej 2,380 (61%) 4,516 (76%) 2,251 (53%)
Cainel 1,014 (26%) - (-%) - (-%)
Zlatna - (-%) 530 (9%) 985 (23%)
Voia 78 (2%) 182 (3%) 158 (4%)
Baita-Craciunesti 390 (10%) 553 (9%) 721 (17%)
Bolcana 39 (1%) 190 (3%) 142 (3%)
---------------------------------------------------------------------
3,901 (100%) 5,971 (100%) 4,257 (100%)
---------------------------------------------------------------------
Greek mineral
properties
Stratoni 421 (14%) 11,376 (6%) -
Skouries 687 (23%) 110,914 (57%) -
Olympias 1,939 (63%) 73,517 (37%) -
---------------------------------------------------------------------
3,047 (100%) 195,807 (100%) - (-%)
---------------------------------------------------------------------
Total 6,948 (100%) 201,778 (100%) 4,257 (100%)
---------------------------------------------------------------------
Three-month periods ended 31 December
-----------------------------------------------
(in thousands of 2005 2004
US dollars) $ $
---------------------------------------------------------------------
Romanian mineral
properties
Certej 724 (67%) 1,799 (73%)
Cainel 205 (19%) - (-%)
Zlatna - (-%) 266 (11%)
Voia 11 (1%) 74 (3%)
Baita-Craciunesti 130 (12%) 157 (6%)
Bolcana 11 (1%) 166 (7%)
---------------------------------------------------------------------
1,081 (100%) 2,462 (100%)
---------------------------------------------------------------------
Greek mineral
properties
Stratoni 11 (1%) 11,376 (6%)
Skouries 118 (7%) 110,914 (57%)
Olympias 1,588 (92%) 73,517 (37%)
---------------------------------------------------------------------
1,717 (100%) 195,807 (100%)
---------------------------------------------------------------------
Total 2,798 (100%) 198,270 (100%)
---------------------------------------------------------------------
The Company incurred a loss of $10.41 million ($0.09 per share) for the year ended 31 December 2005, compared to $19.18 million ($0.39 per share) for 2004. The Company incurred a loss of $4.31 million ($0.04 per share) for the three-month period ended 31 December 2005, compared to $8.13 million ($0.17 per share) for the same period of 2004. The following factors have contributed to this large reduction in loss for the year and three-month period ended 31 December 2005, compared to the same periods of 2004: - Hellas Gold commenced production at its Stratoni mine in September 2005. As a result, the Company recorded $0.15 million in gross profit on revenues of $1.52 million in 2005 and $1.46 million in Q4 2005 for the sale of concentrates by Hellas Gold, compared to $Nil for the same periods of 2004. Cost of sales of $1.37 million included non-recurring costs relating to the start-up Start-up The earliest stage of a new business venture. of operations at Stratoni, fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). disproportionate dis·pro·por·tion·ate adj. Out of proportion, as in size, shape, or amount. dis  pro·por to production output in a ramp-up phase,
and $0.20 million in amortisation Noun 1. amortisation - the reduction of the value of an asset by prorating its cost over a period of yearsamortization reduction, step-down, diminution, decrease - the act of decreasing or reducing something 2. and depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able expenses. - The Company's interest income has increased to $1.26 million in 2005 and $0.34 million in Q4 2005, from $0.50 million and $0.23 million, respectively, for the same periods of 2004, primarily as a result of the Company holding significantly higher cash balances during 2005 following the completion of private placements during 2004. - On 9 February 2004, the Company acquired an initial 37.97% interest in Hellas Gold. From 9 February 2004 to 30 November 2004, the Company's interest in Hellas Gold was accounted for as an equity investment. On 30 November 2004, the Company completed the acquisition of additional shares in Hellas Gold, increasing its total interest from 37.97% to 55.70% (65% on a fully-diluted basis). The acquisition was accounted for as a purchase and the operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. of Hellas Gold were included in the consolidated statements of loss and deficit from 30 November 2004, the effective date of the acquisition. In 2005, Hellas Gold's administrative and overhead expenses amounted to $2.11 million, compared to the Company's share of loss in equity investment of $0.73 million from 9 February to 30 November 2004 and Hellas Gold's administrative and overhead expenses of $0.30 million for the remainder of 2004. Hellas Gold's administrative and overhead expenses in 2005 and 2004 are mostly attributable to the various costs involved in preparing the commencement of production at Stratoni in September 2005, and preparing studies and business plans for Hellas Gold's projects of Skouries and Olympias. In 2005, Hellas Gold incurred an expense of $3.85 million, compared to $1.47 million from 30 November to 31 December 2004, for ongoing water pumping The pumping of water is a basic and practical technique, far more practical than scooping it up with one's hands or lifting it in a hand-held bucket. This is true whether the water is drawn from a fresh source, moved to a needed location, purified, or used for irrigation, washing, or and treatment at its non-operating mines of Olympias and Stratoni (Madem Lakkos) (including non-recurring costs in 2005 of approximately $2.0 million associated with the refurbishment of pumps and pipes), in compliance with Hellas Gold's commitment to the environment under its contract with the Greek State. - The Company's corporate administrative and overhead expenses have decreased significantly from $6.25 million in 2004 and $1.95 million in Q4 2004, to $3.15 million and $1.06 million, respectively, for the same periods of 2005, primarily as a result of the Company's newly adopted practice of recharging costs and overheads to its operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. in 2005, a portion of which is capitalised by such subsidiaries. - Effective 31 December 2005, the Company relinquished re·lin·quish tr.v. re·lin·quished, re·lin·quish·ing, re·lin·quish·es 1. To retire from; give up or abandon. 2. To put aside or desist from (something practiced, professed, or intended). 3. its 80%-owned exploitation license for the Bolcana perimeter The boundary of a system or network, which defines the inside and outside. It is typically determined by firewalls and addresses. See DMZ. in Romania and an impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. cost of $2.36 million was recorded for the year and three-month period ended 31 December 2005, compared to a greater impairment cost of $4.81 million for the same periods of 2004 relating to the relinquishment RELINQUISHMENT, practice. A forsaking, abandoning, or giving over a right; for example, a plaintiff may relinquish a bad count in a declaration, and proceed on the good: a man may relinquish a part of his claim in order to give a court jurisdiction. of the Zlatna perimeter in Romania effective 31 December 2004. - The Company recorded a non-cash equity-based compensation expense of $1.82 million in 2005 and $1.06 million in Q4 2005, compared to $6.42 million and $1.88 million, respectively, for the same periods of 2004. This decrease in 2005 reflects the fact that fewer share options and shares were granted as compensation in that period compared to the same periods of 2004, and that the cost of share options granted in 2005 has been amortised according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: periods of such share options, in contrast with the share options granted in 2004 which, for the most part, vested vested adj. referring to having an absolute right or title, when previously the holder of the right or title only had an expectation. Examples: after 20 years of employment Larry Loyal's pension rights are now vested. (See: vest, vested remainder) immediately upon grant. Also, in 2005, the Company adopted a practice of recharging some of its equity-based compensation expense to its operating subsidiaries, a portion of which is capitalised by such subsidiaries. - Effective 1 October 2004, the Company changed its functional currency from the Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents to the United States dollar. Despite this, during 2005, the Company retained significant cash balances in Euro in order to meet a Euro subscription obligation in Hellas Gold in Q1 2005. Hellas Gold also retained significant cash balances in Euro in order to meet operating, administrative and overhead expenses. Consequently, the Company recorded a foreign exchange loss of $0.94 million and $0.04 million in 2005 and Q4 2005, respectively. The loss resulted primarily from a strengthening of the United States dollar against the Euro as at 31 December 2005 compared to 31 December 2004. In contrast, the Company had realised a foreign exchange gain of $0.51 million and $1.27 million in 2004 and Q4 2004, respectively. - The Company's amortisation expense has increased to $0.24 million in 2005 from $0.09 million in 2004, primarily as a result of the Company acquiring significant assets through the acquisition of a 65% interest in Hellas Gold in November 2004. - In December 2003, the Company raised $15.09 million by way of a brokered private placement of convertible loan notes, for which the Company recorded a non-cash expense Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) for financing costs of $1.12 million in 2004 and $Nil in Q4 2004, compared to $Nil for the same periods of 2005. - The Company recorded a credit for income taxes of $1.70 million in 2005 and $0.39 million in Q4 2005, compared to a lesser credit of $0.48 million and $0.53 million, respectively, for the same periods of 2004. The credits have arisen due to the Company recognising a future tax asset for the losses carried forward in Hellas Gold. The credits for 2005 have increased compared to 2004 due to the increase in losses in Hellas Gold. Liquidity and capital resources As at 31 December 2005, the Company had cash and cash equivalents of $30.54 million, compared to $65.25 million as at 31 December 2004, and working capital of $33.77 million, compared to $63.48 million as at 31 December 2004. The decrease in cash and cash equivalents as at 31 December 2005, compared to the balances as at 31 December 2004, resulted primarily from operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. ($8.21 million), capital expenditure in Greece ($7.84 million), the effects of foreign currency translation on cash ($4.86 million), deferred exploration and development costs in Romania ($3.90 million), funds pledged as collateral to guarantee environmental commitments at Stratoni ($3.54 million), a net increase in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying vs. accounts payable ($3.14 million), deferred development costs in Greece ($2.84 million), an increase in inventory ($1.63 million), purchase of equipment ($0.22 million) and capital raising costs ($0.01 million), offset by interest earned ($1.26 million) and the exercise of options ($0.17 million). In September 2005, Hellas Gold pledged $3.54 million (EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 3.00 million) to the National Bank of Greece The National Bank of Greece (NBG; Greek: Εθνική Τράπεζα της Ελλάδος as collateral for a Letter of Guarantee issued by the National Bank of Greece to the Greek Ministry of Development to guarantee Hellas Gold's environmental commitments under its mining permit at Stratoni. The Letter of Guarantee expires on 31 December 2010. The investment bears a rate of interest of Euribor plus 0.8% per annum. The following table sets forth the Company's contractual obligations including payments due for each of the next five years and thereafter:
(in thousands of US dollars) Payments due by period
---------------------------------------------------------------------
Total Less than 1 - 3 4 - 5 After
Contractual obligations 1 year years years 5 years
---------------------------------------------------------------------
Operating lease
(London office) 933 187 373 373 -
Exploration licence
spending commitments
(Voia, Romania) 1,459 - 1,459 - -
---------------------------------------------------------------------
Total contractual
obligations 2,392 187 1,832 373 -
---------------------------------------------------------------------
In 2006, the Company expects to spend (i) $12.80 million in capital expenditures to fund the development of its projects of Stratoni ($11.05 million), Olympias ($1.75 million), Skouries ($Nil) and Certej ($Nil), (ii) $6.63 million in exploration and development costs for Greece ($4.05 million) and Romania ($2.58 million), and (iii) $3.39 million on corporate administrative and overhead expenses. The Company expects to fund such costs from existing cash balances and operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. generated at Stratoni. Transactions with related parties During the financial year ended 31 December 2005, Hellas Gold incurred costs of $9.66 million (2004 - $3.65 million) for management, technical and engineering services received from a related party, Aktor S.A., a 35% shareholder in Hellas Gold. As at 31 December 2005, Hellas Gold had accounts payable of $1.47 million (2004 - $1.37 million) to Aktor S.A. These expenses were contracted in the normal course of operations and are recorded at the exchange amount agreed by the parties. Significant acquisition in 2004 In February 2004, the Company acquired an initial 37.97% interest (30% on a fully-diluted basis) in Hellas Gold for a total subscription price of EUR 18 million ($24.06 million) in cash. In November 2004, the Company completed the acquisition of additional shares in Hellas Gold (the "Purchased Shares"), increasing its total interest from 37.97% to 55.70%, and assumed an obligation to subscribe to Verb 1. subscribe to - receive or obtain regularly; "We take the Times every day" subscribe, take buy, purchase - obtain by purchase; acquire by means of a financial transaction; "The family purchased a new car"; "The conglomerate acquired a new company"; additional shares in Hellas Gold for a subscription price of $23.48 million (the "Subscription Obligation"), resulting in an interest of 65% on a fully-diluted basis (the "Acquisition"). The total price paid by the Company for the Purchased Shares and for the assumption of the Subscription Obligation was $125.35 million, satisfied as follows: (a) $77.43 million by the issue in November 2004 of 30,423,280 common shares to the vendors at a deemed issue price of Pounds Sterling 1.75 (C$3.98) per share. This was accounted for at a price per share of Pounds Sterling 1.38 (C$3.14), representing the then fair market value of such shares; and (b) $47.92 million paid in cash to the vendors in December 2004. Transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). of $3.99 million were also accounted for as part of the Acquisition. In January 2005, the Company satisfied the Subscription Obligation for a subscription price of $23.48 million. The Acquisition was accounted for as a purchase and the results of operations of Hellas Gold were included in the consolidated statements of loss and deficit from 30 November 2004, the effective date of the Acquisition. From 9 February 2004 to 30 November 2004, the Company's initial 37.97% interest (30% on a fully-diluted basis) in Hellas Gold was accounted for as an equity investment and the Company's share of loss in Hellas Gold was included in the consolidated statements of loss and deficit. Change in functional and reporting currency Reporting Currency The currency used in published reports and financial documents. Notes: All annual and quarterly reports state the currency in which their results are listed. Effective 1 October 2004, the Company changed its functional currency from the Canadian dollar to the United States dollar. In general, this change resulted from a combination of a gradual increase in the operational exposure to the United States dollar and predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. United States dollar based asset and investment base of the Company and from a gradual increase in the overall proportion of business activities conducted in United States dollars. Concurrent with this change in functional currency, the Company adopted the United States dollar as its reporting currency. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in Canada ("Canadian GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "), the change was effected by translating all assets and liabilities, at the end of the prior reporting periods, at the existing United States/Canadian dollar foreign exchange spot rate, while income for those periods were translated at the average rate for each period. Equity transactions have been translated at the historical rates, with opening equity on 30 June 2000, restated at the rate of exchange on that date. The resulting net translation adjustment has been credited to the cumulative translation adjustment account in the equity section of the balance sheet. Significant accounting policies In this document, unless otherwise indicated, all financial data and discussion is based upon consolidated financial statements prepared on the going concern basis in accordance with Canadian GAAP and reflect the following significant accountant policies. Basis of consolidation - Business acquisitions are accounted for under the purchase method and the results of operations of these businesses are included in these consolidated financial statements from the acquisition date. Investments in affiliated companies Affiliated Companies A situation that occurs when one company owns a minority interest (less than 50%) in another company. Also refers to companies that are related to each other in some way. Notes: An affiliated company is sometimes referred to as a subsidiary. over which the Company has significant influence are accounted for using the equity method. Investments in other businesses are recorded at cost. Estimates, risks and uncertainties - The preparation of financial statements in conformity with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets Contingent Asset An asset in which the possibility of ownership depends solely upon future events uncontrollable by the company. Notes: An example might be a settlement from a lawsuit. See also: Asset, Balance Sheet, Contingent Liability, Liability and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Significant estimates and assumptions include those related to the recoverability of deferred exploration and development costs for mineral properties. While management believes that these estimates and assumptions are reasonable, actual results could vary significantly. Deferred exploration and development costs - Acquisition costs of resource properties, together with direct exploration and development costs incurred thereon there·on adv. 1. On or upon this, that, or it. 2. Archaic Following that immediately; thereupon. Adv. 1. thereon - on that; "text and commentary thereon" on it, on that , are deferred and capitalised. Upon reaching commercial production, these capitalised costs are transferred from exploration properties to producing properties on the consolidated balance sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. and are amortised into operations using the unit-of-production method over the estimated useful life of the estimated related ore reserves. Based on annual impairment reviews made by management, in the event that the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. expectation is that the net carrying amount of these capitalised exploration and development costs will not be recovered such as would be indicated where:
- Producing properties:
- the carrying amounts of the capitalised costs exceed the related
undiscounted net cash flows of reserves;
- Exploration properties:
- exploration activities have ceased;
- exploration results are not promising such that exploration will
not be planned for the foreseeable future;
- lease ownership rights expire; or
- insufficient funding is available to complete the exploration
program;
then the carrying amount is written down accordingly and the write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. amount charged to operations. Foreign currency translation - The Company's functional currency is the United States dollar. Monetary assets and liabilities Monetary assets and liabilities Assets and liabilities with contractual payoffs. denominated in foreign currencies are translated at the exchange rate in effect at the balance sheet date. Non-monetary assets and liabilities and revenue and expenses arising from foreign currency transactions are translated at the exchange rate in effect at the date of the transaction. Exchange gains or losses arising from the translation are included in operations. Integrated foreign subsidiaries are accounted for under the temporal method Temporal method A currency translation method under which the choice of exchange rate depends on the underlying method of valuation. Assets and liabilities valued at historical cost (market cost) are translated at the historical (current market) rate. . Under this method, monetary assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenue and expenses are translated at average rates for the period. Exchange gains or losses arising from the translation are included in operations except for those related to mineral properties which are capitalised. The Company accounts for Deva deva (Sanskrit: “divine”) In the Vedic religion of India, one of many divine powers, roughly divided into sky, air, and earth divinities. During the Vedic period, the gods were divided into two classes, the devas and the asuras. Gold and European Goldfields Deva SRL 1. SRL - Bharat Jayaraman. ["Towards a Broader Basis for Logic Programming", B. Jayaraman, TR CS Dept, SUNY Buffalo, 1990]. 2. SRL - Schema Representation language. 3. SRL - Structured Robot Language. C. Blume & W. Jacob, U Karlsruhe. as integrated foreign subsidiaries. Self-sustaining foreign subsidiaries are accounted for under the current rate method. Under this method, all assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenue and expenses are translated at average rates for the period. Exchange gains or losses arising from the translation are recorded in equity in the cumulative translation adjustment account. The Company accounts for Hellas Gold as a self-sustaining foreign subsidiary. Financial instruments - The Company's financial instruments consist of cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. . Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The fair values of these financial instruments approximate their carrying values Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. unless otherwise noted. The Company's operations expose it to significant fluctuations in foreign exchange rates. The Company has monetary assets and liabilities denominated in British pounds sterling, Romanian lei, euros and Canadian dollars, which are, therefore, subject to exchange variations against the reporting currency, the United States dollar. Included in cash and cash equivalents is approximately $12.15 million denominated in euros. The Company does not currently have any hedging policies or practices in place. Revenue recognition - Revenues from the sale of concentrates are recognised and are recorded at market prices when title transfers and the rights and obligations of ownership pass to the customer. A number of the Company's concentrate products are sold under pricing arrangements where final prices are determined by quoted market prices in a period subsequent to the date of sale. These concentrates are provisionally pro·vi·sion·al adj. Provided or serving only for the time being. See Synonyms at temporary. n. 1. A person hired temporarily for a job, typically before having taken an examination qualifying the person for permanent priced at the time of sale based on forward prices for the expected date of the final settlement. The terms of the contracts result in non-hedge derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. that do not qualify for hedge accounting Why is hedge accounting necessary? Many financial institutions and corporate businesses (entities) use derivative financial instruments to hedge their exposure to different risks (eg interest rate risk, foreign exchange risk, commodity risk, etc). treatment, because of the difference between the provisional Temporary; not permanent. Tentative, contingent, preliminary. A provisional civil service appointment is a temporary position that fills a vacancy until a test can be properly administered and statutory requirements can be fulfilled to make a permanent appointment. price and the final settlement price. These embedded Inserted into. See embedded system. derivatives, if material, are adjusted to fair value through revenue each period until the date of final price determination. Subsequent variations in the price are recognised as revenue adjustments as they occur until the price is finalised. Equity-based compensation - The Company operates a share option plan and a restricted share unit plan, which are described in Note 14. The Company accounts for equity-based compensation granted under such plans using the fair value method of accounting. Under such method, the cost of equity-based compensation is estimated at fair value and is recognised in the income statement as an expense, or capitalised to deferred exploration and development costs when the compensation can be attributed to mineral properties. This cost is amortised over the relevant vesting period for grants to directors, officers and employees, and recorded in full on the date of grant for grants to non-employees. Any consideration received by the Company on exercise of share options is credited to share capital. Asset retirement obligation Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. - Effective 1 January 2004, the Company adopted the CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) Handbook
This article is about reference works. For the subnotebook computer, see .
A claim for the right to return or the right to demand the return of a security that has been previously accepted as a result of bad delivery or other irregularities in the delivery and settlement process. and abandonment. The fair value of the liability of an asset retirement obligation is recorded when it is incurred and the corresponding increase to the asset is depreciated Depreciated may refer to:
The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the element considered in the initial measurement at fair value. At 31 December 2005, the Company had an asset retirement obligation relating to its mineral properties in Greece. Impairment of long-lived assets - Effective 1 January 2004, the Company adopted the new recommendations of CICA Handbook Section 3063 "Impairment of Long-lived Assets" on a prospective basis. Section 3063 requires that long-lived assets and intangibles to be held and used by the Company be reviewed for possible impairment whenever events or changes in circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or indicate that the carrying amount of an asset may not be recoverable. If changes in circumstances indicate that the carrying amount of an asset that an entity expects to hold and use may not be recoverable, future cash flows expected to result from the use of the asset and its disposition must be estimated. If the undiscounted value of the future cash flows is less than the carrying amount of the asset, impairment is recognised based on the fair value of the assets. Effective 31 December 2004, the Company relinquished its 80%-owned exploitation license for the Zlatna perimeter in Romania and a provision for the costs of this property has been recorded. Effective 31 December 2005, the Company relinquished its 80%-owned exploitation license for the Bolcana perimeter in Romania and a provision for the costs of this property has been recorded. Inventory - Inventories of ore mined and metal concentrates are valued at the lower of combined production cost and net realisable value. Production costs include the costs directly related to bringing the inventory to its current condition and location, such as materials, labour, mine site overheads and related depreciation of mining and processing facilities, related depletion of mineral properties and deferred exploration and development costs. Exploration supplies are valued at the lower of cost and net realisable value. Disclosure controls and procedures & internal control over financial reporting The Chief Executive Officer and the Chief Financial Officer of the Company (the "Certifying Officers") have established and maintained in the year ended 31 December 2005 disclosure controls and procedures and internal control over financial reporting for the Company. The Certifying Officers have caused disclosure controls and procedures to be designed under their supervision, to provide reasonable assurance that material information relating to the Company and its subsidiaries is made known to the Certifying Officers by others within those entities, as appropriate to allow decisions regarding required disclosure within the time periods specified by legislation, particularly during the period in which interim and annual filings are being prepared. The Certifying Officers have evaluated the effectiveness of the Company's disclosure controls and procedures as at 31 December 2005 and have concluded that such procedures are adequate to meet the objectives for which they were established. The Certifying Officers believe that "cost effective" disclosure controls and procedures and internal control systems can only provide reasonable assurance, and not absolute assurance, that such objectives are met. The Certifying Officers have caused internal control over financial reporting to be designed under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP. During the year ended 31 December 2005, there has been no change in the Company's internal control over financial reporting that have materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. Outstanding share data The following represents all equity shares outstanding and the number of common shares into which all securities are convertible, exercisable or exchangeable:
Common shares: 112,688,708
Common share options: 4,017,667
Restricted share units: 850,000
------------
Common shares (fully-diluted): 117,556,375
Preferred shares: Nil
Outlook Greece - In September 2005, Hellas Gold resumed production at Stratoni following the award by the Greek State of all necessary environmental and mining permits. Production of ore is expected to reach 170,000 tonnes by the end of the first year of production, steadily increasing to 400,000 tonnes per annum by year five. In January 2006, Hellas Gold submitted business plans to the Greek government for its major gold and base metals projects of Skouries and Olympias. This submission represents a significant milestone in obtaining the necessary environmental and mining permits to develop the projects. The Company also continues to look for new discoveries through focused exploration programmes. Romania - In July 2005, the Company completed an in-house pre-feasibility study on its 80%-owned Certej project. The study confirms that a gold/silver flotation concentrate can be produced with high grades and recoveries. In addition, the Company is pursuing a metallurgical testwork programme investigating the feasibility of producing gold dore on site by a cost effective process design. Environmental Impact Assessments (EIA (Electronic Industries Alliance, Arlington, VA, www.eia.org) A membership organization founded in 1924 as the Radio Manufacturing Association. It sets standards for consumer products and electronic components. Levels I and II) were completed in December 2005. The next stage will be to complete an Environmental Impact Study (EIS (1) (Executive Information System) An information system that consolidates and summarizes ongoing transactions within the organization. It provides top management with all the information it requires at all times from internal and external sources. ) in order to progress to full feasibility study, permit application and project development. Finally, the Company continues to conduct focused exploration programmes to expand the resource base in Romania. Risks and uncertainties The risks and uncertainties affecting the Company, its subsidiaries and their business are discussed in the Company's Annual Information Form for the year ended 31 December 2005, filed on SEDAR at www.sedar.com. European Goldfields Limited (TSX:EGU) (AIM:EGU) |
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