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half year report

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    RNS Number:8393O
    Centamin Egypt Limited
    27 February 2008
    Centamin Egypt Limited
    ("Centamin" or "the Company")
    Half Year Report for the Half Year Ended 31 December 2007
    DIRECTORS' REPORT
    The Directors of Centamin Egypt Limited (the Company) herewith submit the
    financial report for the half-year ended December 31, 2007. In order to comply
    with the provisions of the Corporations Act 2001, the Directors' Report is as
    follows:
    DIRECTORS
    The names of the Directors and officers of the company during or since the end
    of the half-year are:
    Mr Sami El-Raghy, Executive Chairman
    Mr Josef El-Raghy, Managing Director/CEO
    Mr Colin Cowden, Non Executive Director
    Mr Gordon B Speechly, Non Executive Director
    Dr Thomas Elder, Non Executive Director
    Mr H Stuart Bottomley, Non Executive Director
    COMPANY SECRETARY
    Mrs Heidi Brown
    PRINCIPAL ACTIVITIES
    The principal activity of the consolidated entity during the course of the
    financial year was the exploration for precious and base metals and the ongoing
    development and construction work at the Sukari Gold Project in Egypt.
    REVIEW OF OPERATIONS
    The Company recorded a consolidated operating profit for the period of
    US$5,662,037 compared with a consolidated operating profit of US$39,726 for the
    corresponding period last year. The consolidated operating profit was primarily
    attributable to a foreign exchange gain of US$5,927,574 (2006: (US$101,881)) and
    interest revenue of US$3,290,245 (2006: US$1,059,389) resulting from the
    Company's significant cash balances achieved through equity raisings completed
    in April 2007 and November 2007. The foreign exchange gain is attributable to
    the strengthening of the Canadian Dollar against the United States Dollar during
    the period.
    During the half-year the principal focus has been threefold:
    * Continuing development and construction work at the Sukari Gold Project in
    Egypt;
    * Upgrading the Sukari Mineral Resource to 7.46 Moz Measured and Indicated,
    plus 3.7 Moz Inferred at a 0.5g/t cut off grade; and
    * Regional and near mine exploration drilling at Kurdeman and Sami South
    intersecting high grade and anomalous gold mineralization results
    respectively.
    On October 24, 2007, the Company announced that both the Kori Kollo processing
    plant and the Isparta power plant had arrived safely at the Egyptian seaport of
    Alexandria and their cargoes had been discharged. The dismantling of the Kori
    Kollo processing facility in Bolivia and the Isparta 28MW power plant in Turkey
    were completed in September and both sites were closed and signed off. Trucking
    of the plant to the Sukari site has been completed without incident.
    On November 23, 2007, the Company announced that it had sold on a private basis
    an aggregate of 112,000,000 special warrants at a price of C$1.20 per special
    warrant for aggregate gross proceeds of C$134,400,000, which includes the
    exercise in full by the Underwriters of the Underwriters' option. On December
    28, 2007, the special warrants were automatically converted into ordinary shares
    on a one for one basis. The net proceeds of this equity financing are to be
    applied to fund the continued development of the Sukari gold project,
    underground development, other exploration and general corporate purposes.
    The Directors consider that the Sukari Gold Project is 100% fully funded through
    to gold production currently forecast to be in quarter four this calendar year.
    As a result of the equity raising, referred to above, the Company no longer
    needs to pursue debt financing, has no debt, no hedging and at December 31, 2007
    had a cash balance of US$226M.
    In the December quarter, the Sukari Mineral Resource was upgraded to 7.46 Moz
    Measured and Indicated, plus 3.7 Moz Inferred at a 0.5g/t cut off grade. The
    Measured and Indicated Mineral Resource has increased by 0.62 Moz or 9% to 7.46
    Moz, from 6.84 Moz (September 20, 2007) showing the effectiveness of the infill
    drilling programme (Table 1). Measured and Indicated resources account for 67%
    of total resource. The majority of the resource growth occurred within the Amun
    Deeps and Ra - Gazelle Zones, both testing the Hapi Zone and parallel
    mineralized structures.
    Table 1 - December 2007 Resource Calculation
    Measured Indicated Total Inferred
    (Measured + Indicated)
    Cut-off Mt g/t Mt g/t Mt g/t Moz Mt g/t Moz
    0.5 60.10 1.41 99.87 1.48 159.96 1.45 7.46 64.0 1.8 3.7
    0.7 43.01 1.73 72.25 1.81 115.26 1.78 6.61 47.6 2.2 3.3
    1.0 27.66 2.22 47.20 2.33 74.86 2.29 5.52 32.9 2.8 2.9
    Note to Table: Figures in table may not add correctly due to rounding
    Paste the following link into your web browser to download the PDF document
    related to this announcement:
    http://www.rns-pdf.londonstockexchange.com/rns/8393o_-2008-2-27.pdf
    Figure 1 - Resource growth at Sukari from April 1997 to December 2007
    Shareholders are referred to the Company's website (www.centamin.com) for
    further details.
    AUDITOR'S INDEPENDENCE DECLARATION
    The auditor's independence declaration is included on page 3 of the half-year
    financial report.
    Signed in accordance with a resolution of the directors made pursuant to s306(3)
    of the Corporations Act 2001.
    On behalf of the Directors
    Josef El-Raghy
    Managing Director/CEO
    Perth, February 26, 2008
    Deloitte Touche Tohmatsu
    A.B.N. 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
    26 Febraury 2008
    Dear Board Members
    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 review of the financial statements of Centamin
    Egypt Limited for the financial half-year ended 31 December 2007, 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 review; and
    (ii) any applicable code of professional conduct in relation to the review.
    Yours sincerely
    DELOITTE TOUCHE TOHMATSU
    KEITH JONES
    Partner
    Chartered Accountants
    Independent Auditor's Review Report
    to the members of Centamin Egypt Limited
    We have reviewed the accompanying half-year financial report of Centamin Egypt
    Limited, which comprises the balance sheet as at 31 December 2007, and the
    income statement, cash flow statement, statement of changes in equity for the
    half-year ended on that date, selected explanatory notes and the directors'
    declaration of the consolidated entity comprising the company and the entities
    it controlled at the end of the half-year or from time to time during the
    half-year as set out on pages 6 to 22.
    Directors' Responsibility for the Half-Year Financial Report
    The directors of the company are responsible for the preparation and fair
    presentation of the half-year 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 half-year 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.
    Auditor's Responsibility
    Our responsibility is to express a conclusion on the half-year financial report
    based on our review. We conducted our review in accordance with Auditing
    Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report
    Performed by the Independent Auditor of the Entity, in order to state whether,
    on the basis of the procedures described, we have become aware of any matter
    that makes us believe that the half-year financial report is not in accordance
    with the Corporations Act 2001 including: giving a true and fair view of the
    consolidated entity's financial position as at 31 December 2007 and its
    performance for the half-year ended on that date; and complying with Accounting
    Standard AASB 134 Interim Financial Reporting and the Corporations Regulations
    2001. As the auditor of Centamin Egypt Limited, ASRE 2410 requires that we
    comply with the ethical requirements relevant to the audit of the annual
    financial report.
    A review of a half-year financial report consists of making enquiries, primarily
    of persons responsible for financial and accounting matters, and applying
    analytical and other review procedures. A review is substantially less in scope
    than an audit conducted in accordance with Australian Auditing Standards and
    consequently does not enable us to obtain assurance that we would become aware
    of all significant matters that might be identified in an audit. Accordingly, we
    do not express an audit opinion.
    Auditor's Independence Declaration
    In conducting our review, we have complied with the independence requirements of
    the Corporations Act 2001.
    Conclusion
    Based on our review, which is not an audit, we have not become aware of any
    matter that makes us believe that the half-year financial report of Centamin
    Egypt Limited is not in accordance with the Corporations Act 2001, including:
    (a) giving a true and fair view of the consolidated entity's financial
    position as at 31 December 2007 and of its performance for the half-year ended
    on that date; and
    (b) complying with Accounting Standard AASB 134 Interim Financial Reporting
    and the Corporations Regulations 2001.
    DELOITTE TOUCHE TOHMATSU
    KEITH JONES
    Partner
    Chartered Accountants
    Perth, 26 February 2008
    DIRECTORS' DECLARATION
    The directors declare that:
    a) 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; and
    b) 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 consolidated entity.
    Signed in accordance with a resolution of the directors made pursuant to s303(5)
    of the Corporations Act 2001.
    On behalf of the Directors
    Josef El-Raghy
    Managing Director/CEO
    Perth, February 26, 2008
    CONDENSED CONSOLIDATED INCOME STATEMENT
    Half Year Ended
    December 31
    2007 2006
    US$ US$
    Revenue - Note 4 3,290,245 1,059,389
    Other income - Note 4 201,780 433,146
    Corporate administration expenses (2,071,919) (843,357)
    Foreign exchange gain / (loss) 5,927,574 (101,881)
    Share based payments (1,381,402) (188,018)
    Other expenses (304,241) (319,553)
    Profit before income tax 5,662,037 39,726
    Tax (expense) / income - -
    Net profit for the period 5,662,037 39,726
    Earnings per share
    - Basic (cents per share) 0.745 0.007
    - Diluted (cents per share) 0.733 0.014
    The above Condensed Consolidated Income Statements should be read in conjunction
    with the accompanying notes.
    CONDENSED CONSOLIDATED BALANCE SHEET
    December 31, 2007 June 30,
    2007
    US$ US$
    CURRENT ASSETS
    Cash and cash equivalents 226,117,391 136,501,015
    Trade and other receivables 43,840 86,893
    Inventories - 140,400
    Prepayments 768 7,407
    Total current assets 226,161,999 136,735,715
    NON-CURRENT ASSETS
    Plant and equipment 11,943,285 12,067,243
    Exploration, evaluation and development expenditure - Note 5 117,082,165 69,915,454
    Total non-current assets 129,025,450 81,982,697
    Total assets 355,187,449 218,718,412
    CURRENT LIABILITIES
    Trade and other accounts payable 2,161,250 5,910,093
    Provisions 602,752 457,875
    Total current liabilities 2,764,002 6,367,968
    NON-CURRENT LIABILITIES
    Trade and other accounts payable 150,000 150,000
    Total non-current liabilities 150,000 150,000
    Total liabilities 2,914,002 6,517,968
    NET ASSETS 352,273,447 212,200,444
    EQUITY
    Issued Capital - Note 7 352,770,663 217,915,069
    Reserves 5,603,112 6,047,740
    Accumulated losses (6,100,328) (11,762,365)
    TOTAL EQUITY 352,273,447 212,200,444
    The above Condensed Consolidated Balance Sheets should be read in conjunction
    with the accompanying notes.
    CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

    Issued Accumulated
    Capital Reserves Options Reserve Losses Total
    US$ US$ US$ US$ US$

    At June 30, 2006 94,219,681 2,294,794 433,192 (18,646,792) 78,300,875
    Profit for the period - - - 39,726 39,726
    Share options exercised 270,276 - - - 270,276
    Cost of share based payments - - 195,410 - 195,410
    Contributions of equity - - - - -
    Transfer to issued capital - - - (5,758) (5,758)
    At December 31, 2006 94,489,957 2,294,794 628,602 (18,612,824) 78,800,529
    At June 30, 2007 217,915,069 2,294,794 3,752,946 (11,762,365) 212,200,444
    Profit for the period - - - 5,662,037 5,662,037
    Share options exercised 7,031,179 - - - 7,031,179
    Cost of share based payments - - 1,381,402 - 1,381,402
    Contributions of equity 125,998,385 - - - 125,998,385
    Transfer to issued capital 1,826,030 - (1,826,030) - -
    At December 31, 2007 352,770,663 2,294,794 3,308,317 (6,100,328) 352,273,446
    The above Condensed Consolidated Statement of Changes in Equity should be read
    in conjunction with the accompanying notes.
    CONDENSED CONSOLIDATED CASH FLOW STATEMENT
    Half Year Ended
    December 31
    2007 2006
    US$ US$
    CASH FLOWS FROM OPERATING ACTIVITIES
    Payments to suppliers and employees (1,881,205) (1,189,366)
    Payments for exploration (5,115,174) (4,388,022)
    Other income 201,780 -
    Net cash generated by/(used in) operating activities (6,794,599) (5,577,388)
    CASH FLOWS FROM INVESTING ACTIVITIES
    Payments for development (44,859,095) (7,456,472)
    Interest received 3,290,245 1,059,389
    Net cash generated by/(used in) investing activities (41,568,850) (6,397,083)
    CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from the issue of equity & conversion of options 133,029,564 270,276
    Project finance due diligence (926,435) -
    Financial activity (bank charges and realised foreign exchange gain / (loss)) (620,478) 32,613
    Net cash generated by/(used in) financing activities 131,482,651 302,888
    Net increase / (decrease) in cash and cash equivalents 83,119,202 (11,671,582)
    Cash and cash equivalents at the beginning of the financial period 136,501,015 44,513,500
    Effects of exchange rate changes on the balance of cash held in foreign 6,497,174 (155,686)
    currencies
    Cash and cash equivalents at the end of the financial period 226,117,391 32,686,232
    The above Condensed Consolidated Cash Flow Statements should be read in
    conjunction with the accompanying notes.
    NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
    Nature of Operations, Going Concern and Accounting Policies
    Statement of Compliance
    The half-year financial report is a general purpose financial report prepared in
    accordance with the Corporations Act 2001 and AASB 134 Interim Financial
    Reporting. Compliance with AASB 134 ensures compliance with International
    Financial Reporting Standard IAS 34 Interim Financial Reporting. The half-year
    report does not include notes of the type normally included in an annual
    financial report and shall be read in conjunction with the most recent annual
    financial report.
    Basis of Preparation
    The condensed consolidated financial statements have 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. All amounts are presented in United States
    Dollars, unless otherwise noted.
    The accounting policies and methods of computation adopted in the preparation of
    the half-year financial report are consistent with those adopted and disclosed
    in the company's 2007 annual financial report for the financial year ended June
    30, 2007. The presentation currency for the consolidated entity changed from
    Australian Dollars to United States Dollars on July 01, 2007.
    The significant accounting policies which have been adopted in the preparation
    of these condensed consolidated financial statements are:
    (A) 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.
    (B) DEBT AND EQUITY INSTRUMENTS ISSUED BY THE COMPANY
    Debt and equity instruments are classified as either liabilities or as equity in
    accordance with the substance of the contractual arrangement.
    (C) 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.
    (D) 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.
    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.
    (E) 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 classified into the following specified categories:
    financial assets 'at fair value through profit or loss', 'held to maturity
    investments', available for sale" financial assets, and '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.
    Interest income is recognised on an effective interest rate basis for debt
    instruments other than those financial assets 'at fair value through profit and
    loss'.
    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 balance sheet 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.
    In respect of available-for-sale equity instruments, any subsequent increase in
    fair value after an impairment loss is recognised directly in equity.
    (F) FOREIGN CURRENCY
    The individual financial statements of each group entity are presented in the
    currency of the primary economic environment in which the entity operates (its
    functional currency). 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. The
    presentation currency was changed from Australian Dollars to United States
    Dollars from July 01, 2007 to align the presentation currency with the
    functional currency.
    In preparing the financial statements of the individual entities, transactions
    in currencies other than the entity's functional currency (foreign currencies)
    are recorded at the rates of exchange prevailing on the dates of the
    transactions. At each balance sheet date, monetary items denominated in foreign
    currencies are retranslated at the rates prevailing at the balance sheet 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.
    On consolidation, the assets and liabilities of the Group's foreign operations
    (including comparatives) are translated into United States Dollars at exchange
    rates prevailing on the balance sheet date. Income and expense items (including
    comparatives) are translated at the average exchange rates for the period,
    unless exchange rates fluctuated significantly during that period, in which case
    the exchange rates at the dates of the transactions are used. Exchange
    differences arising, if any, are classified as equity and transferred to the
    Group's translation reserve. Such exchange differences are recognised in profit
    or loss in the period in which the foreign operation is disposed.
    (G) 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.
    (H) IMPAIRMENT OF ASSETS (OTHER THAN EXPLORATION AND EVALUATION)
    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.
    (I) 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.
    (J) JOINT VENTURE ARRANGEMENTS
    Jointly controlled assets
    Interests in jointly controlled assets in which the Group is a venturer (and so
    has joint control) are included in the financial statements by recognising the
    Group's share of jointly controlled assets (classified according to their
    nature), the share of liabilities incurred (including those incurred jointly
    with other venturers) and the Group's share of expenses incurred by or in
    respect of each joint venture.
    The Group's interests in assets where the Group does not have joint control are
    accounted for in accordance with the substance of the Group's interest. Where
    such arrangements give rise to an undivided interest in the individual assets
    and liabilities of the joint venture, the Group recognises its undivided
    interest in each asset and liability and classifies and presents those items
    according to their nature.
    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 is 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.
    (K) 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.
    (L) PLANT AND EQUIPMENT
    Plant and equipment, and equipment under finance lease are 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. Depreciation of capitalised
    development expenditure will be provided on a unit of production basis over
    recoverable reserves, whilst on other fixed assets are calculated on a straight
    line basis so as to write off the 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.
    The following estimated useful lives are used in the calculation of
    depreciation:
    Plant & Equipment & Office Furniture - 4- 10 years
    Motor Vehicles - 2 - 8 years
    (M) REVENUE
    Revenue is measured at the fair value of the consideration received or
    receivable.
    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.
    (N) 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.
    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.
    In preparing the consolidated financial statements, all significant intercompany
    balances and transactions, and unrealised profits arising within the
    consolidated entity are eliminated in full.
    (O) SHARE-BASED PAYMENTS
    Employee share options that vested before January 01, 2005 have not been
    expensed. The shares are recognised when the options are exercised and the
    proceeds are allocated to share capital.
    Equity-settled share-based payments granted after November 07, 2002 that were
    vested on or after January 01, 2005, are measured at fair value at the date of
    grant. Fair value is measured under the Black-Scholes option valuation model.
    The fair value determined at the grant date of the equity-settled share-based
    payments is expensed on a straight-line basis over the vesting period, based on
    the consolidated entity's estimate of shares that will eventually vest.
    (P) 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 income
    statement, 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).
    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. 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.
    NOTE 2: SEGMENT REPORTING
    Primary reporting - Business Segments
    The economic entity is engaged in the business of exploration for precious and
    base metals only, which is characterised as one business segment only.
    Secondary reporting - Geographical Segments
    The principal activity of the economic entity during the year was the
    exploration for precious and base metals in Egypt and funding is sourced from
    Canada.
    NOTE 3: EVENTS SUBSEQUENT TO BALANCE DATE
    Other than as set out above there has not risen in the interval between the end
    of the financial year and the date of this report any item, transaction or event
    of a material and unusual nature likely in the opinion of the Directors of the
    Company to affect significantly the operations of the company, the results of
    those operations, or the state of affairs of the Company in subsequent financial
    years.
    NOTE 4: REVENUE
    Half Year Ended
    December 31
    2007 2006
    US$ US$
    (a) Revenue
    Interest revenue 3,290,245 1,059,389
    (b) Other income
    Sale of plant and equipment 199,940 433,146
    VAT refund 1,840 -
    3,492,024 1,492,535
    NOTE 5: EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
    Half Year Ended
    December 31
    2007 2006
    US$ US$
    Exploration and evaluation phase expenditure
    - At Cost (a)
    Balance at the beginning of the period 4,627,793 33,808,721
    Expenditure for the period 5,178,431 6,629,648
    Transfer to Development phase expenditure - -
    Balance at the end of the period 9,806,224 40,438,369
    Development expenditure
    - At Cost (b)
    Balance at the beginning of the period 65,287,661 -
    Expenditure for the period 41,988,280 -
    Transfer from Exploration and evaluation phase expenditure - -
    Balance at the end of the period 107,275,941 -
    Net book value of exploration, evaluation and development phase expenditure 117,082,165 40,438,369
    (a) Included within the cost amount of exploration evaluation and development
    assets is $5,311,744 being the excess of consideration over the net tangible
    assets acquired on the acquisition of Pharaoh Gold Mines NL in January 1999.
    This amount has been treated as part of the cost of exploration, evaluation and
    development. Management believe that the recovery of these amounts will
    satisfactorily be made through the exploitation of the project in due course.
    (b) Development of the Sukari Gold Project commenced in March 2007. Items of
    development phase expenditure relevant to the project are being separately
    accounted for as development phase expenditure.
    NOTE 6: CONTINGENT LIABILITIES
    The Directors are not aware of any contingent liabilities as at the date of
    these unaudited interim consolidated financial statements.
    NOTE 7: ISSUED CAPITAL
    Half Year Ended
    December 31
    2007 2006
    US$ US$
    Fully paid ordinary shares
    Balance at beginning of the period 217,915,069 94,280,380
    Issue of shares under Employee option plan 7,031,179 209,577
    Transfer from share options reserve 1,826,030 -
    Placements 125,998,385 -
    Balance at end of the period 352,770,663 94,489,957
    Change to the then Corporations Law abolished the authorised capital and par
    value concept in relation to share capital from July 01, 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
    Half Year Ended
    December 31, 2007
    Number US$
    Balance at beginning of the period 755,734,232 217,915,069
    Employee share option plan 7,424,931 7,031,179
    Transfer from share options reserve - 1,826,030
    Placements 112,000,000 125,998,385
    Balance at end of the period 875,159,163 352,770,663
    Fully paid ordinary shares carry one vote per share and carry the right to
    dividends.
    Share options granted under the employee share option plan
    In accordance with the provisions of the employee share option plans, as at
    December 31, 2007, executives and employees have options over 11,102,500
    ordinary shares. The expiry dates of the granted options are detailed in Note
    10. 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 10 to the financial statements.
    Share warrants on issue
    As part of the Canadian listing process undertaken during the financial year on
    the Toronto Stock Exchange (TSX) the Company was required to issue to its
    nominated share broker share warrants as part of the arrangement. 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 share plans. As at December 31, 2007 there were 4,007,260 broker
    warrants on issue over and equivalent number of ordinary shares (all of which
    are vested). Further details of the share warrants are contained in Note 10 to
    the financial statements.
    NOTE 8: RELATED PARTY TRANSACTIONS
    The related party transactions for the six months ended December 31, 2007 are
    summarised below:
    - Salaries, superannuation contributions, consulting and
    Directors fees paid to Directors during the six months ended December 31, 2007
    amounted to A$687,040 (December 31, 2006: A$505,053).
    - Mr S El-Raghy and Mr J El-Raghy are Directors and
    shareholders of El-Raghy Kriewaldt Pty Ltd ("ELK"), which provides office
    premises to the Company in Australia. All dealings with ELK are in the ordinary
    course of business and on normal terms and conditions. Rent paid to ELK during
    the six months ended December 31, 2007 amounted to A$30,916 (December 31, 2006:
    A$27,142).
    - 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. Rent paid during the six months ended December 31,
    2007 amounted to GBP 3,900 (December 31, 2006: GBP 3,900).
    - Mr C Cowden, a non-executive director, is also a director
    and shareholder of Cowden Limited, which provides insurance broking services to
    the Company. All dealings with Cowden Limited are in the ordinary course of
    business and on normal terms and conditions. Amounts paid to Cowden Limited for
    insurances during the six months ended December 31, 2007 amounted to A$199,908
    (December 31, 2006: A$110,195) of which A$27,692 was retained by Cowden Limited
    as Brokerage (December 31, 2006: A$15,561).
    - Mr Brian Speechly, a non-executive director, is also a
    director and shareholder of Speechly Mining Pty Ltd, a mining consultancy
    company. Invoices received for payment during the six months ended December 31,
    2007 amounted to A$91,881 (December 31, 2006: A$0)
    The amount of US$150,000 appearing in non-current liabilities of the unaudited
    interim consolidated balance sheet as at December 31, 2007 represents an
    unsecured loan payable 14 days after commencement of commercial production at
    the Sukari project to Egyptian Mineral Commodities, a company which Mr S
    El-Raghy has a financial interest in. This transaction was entered into by the
    Company on September 27, 2001.
    NOTE 9: EARNINGS PER SHARE
    Basic earnings per share are calculated using the weighted average number of
    shares outstanding. Diluted earnings per share are calculated using the treasury
    stock method. In order to determine diluted earnings per share, the treasury
    stock method assumes that any proceeds from the exercise of dilutive stock
    options and warrants would be used to repurchase common shares at the average
    market price during the period, with the incremental number of shares being
    included in the denominator of the diluted earnings per share calculation. The
    diluted earnings per share calculation exclude any potential conversion of
    options and warrants that would increase earnings per share.
    The weighted average number of ordinary shares used in the calculation of basic
    earnings per share is 759,650,488 (December 31, 2006: 578,830,706). The weighted
    average number of ordinary shares used in the calculation of diluted earnings
    per share is 772,852,988 (December 31, 2006: 585,702,826). The earnings used in
    the calculation of basic and diluted earnings per share are US$5,662,037
    (December 31, 2006: US$39,726).
    NOTE 10: SHARE BASED PAYMENTS
    The consolidated entity has an Employee Share 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, 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 issues granted to date.
    In addition options (Series 8) were issued to the Company's share broker in
    Canada as a gratitude payment for professional services provided during the
    listing process on the Toronto Stock Exchange in January 2007. Details of those
    options were:
    * Exercisable any time within 2 years of grant date.
    The following reconciles the outstanding share options granted under the
    Employee Share Option Plan, and other share based payment arrangements, at the
    beginning and end of the financial year:
    Half Year Ended
    December 31,
    2007
    Number of
    options
    Balance at beginning of the period (a) 13,490,000
    Granted during the period (b) 250,000
    Forfeited during the period -
    Exercised during the period (c) 2,637,500
    Expired during the period -
    Balance at the end of the period (d) 11,102,500
    Exercisable at the end of the period 7,030,000
    a) Balance at the start of the period
    Fair value at
    Expiry / Exercise price grant date
    Options series Number Grant date Exercise Date A$ A$

    Series 3 395,000 04 Feb 05 04 Feb 08 0.2804 0.1357
    Series 4 200,000 17 Feb 05 17 Feb 08 0.2804 0.1435
    Series 5 1,700,000 31 Oct 05 31 Oct 10 0.3500 0.1753
    Series 6 1,500,000 08 Dec 05 08 Dec 08 0.4355 0.1495
    Series 7 250,000 30 Aug 06 30 Aug 09 0.6566 0.2785
    Series 8 2,000,000 10 Jan 07 10 Jan 09 0.8000 0.2393
    Series 9 3,615,000 31 Jan 07 31 Jan 10 0.7106 0.3518
    Series 10 2,330,000 24 May 07 24 May 10 1.0500 0.4661
    Series 11 1,500,000 25 Jun 07 25 Jun 10 1.1636 0.3210
    13,490,000
    b) Issued during the period
    Fair value at
    Expiry / Exercise price grant date
    Options series Number Grant date Exercise Date A$ A$

    Series 12 250,000 15 Oct 07 15 Oct 10 1.4034 0.4002
    250,000
    c) Exercised during the period
    Options series Number Exercise Date Share price at
    exercised exercise date
    A$
    Series 3 20,000 25 Oct 07 1.4350
    50,000 07 Nov 07 1.5000
    25,000 08 Nov 07 1.5750
    Series 4 50,000 18 Jul 07 1.2800
    50,000 09 Nov 07 1.5700
    Series 5 30,000 22 Oct 07 1.4200
    Series 7 10,000 08 Aug 07 1.275
    15,000 12 Sep 07 1.210
    10,000 24 Sep 07 1.390
    35,000 27 Sep 07 1.330
    Series 8 1,000,000 19 Oct 07 1.4000
    1,000,000 20 Nov 07 1.4200
    Series 9 20,000 02 Oct 07 1.3700
    25,000 08 Oct 07 1.3350
    55,000 10 Oct 07 1.3400
    25,000 19 Oct 07 1.4000
    25,000 22 Oct 07 1.4200
    15,000 23 Oct 07 1.4400
    15,000 07 Nov 07 1.5000
    37,500 08 Nov 07 1.5750
    15,000 12 Nov 07 1.5200
    10,000 16 Nov 07 1.4650
    100,000 17 Nov 07 1.4650
    2,637,500
    d) Balance at the end of the period
    Exercise Fair value at
    Expiry / price grant date
    Options series Number Grant date Exercise Date A$ A$


    Series 3 300,000 04 Feb 05 04 Feb 08 0.2804 0.1357
    Series 4 100,000 17 Feb 05 17 Feb 08 0.2804 0.1435
    Series 5 1,670,000 31 Oct 05 31 Oct 10 0.3500 0.1753
    Series 6 1,500,000 08 Dec 05 08 Dec 08 0.4355 0.1495
    Series 7 250,000 30 Aug 06 30 Aug 09 0.6566 0.2785
    Series 9 3,202,500 31 Jan 07 31 Jan 10 0.7106 0.3518
    Series 10 2,330,000 24 May 07 24 May 10 1.0500 0.4661
    Series 11 1,500,000 25 Jun 07 25 Jun 10 1.1636 0.3210
    Series 12 250,000 15 Oct 07 15 Oct 10 1.4034 0.4002
    11,102,500
    NOTE 11: SHARE WARRANTS
    a) Balance at the start of the period
    The following share warrants were in existence during the current reporting
    period:-
    Fair value at
    Warrants series Number Grant date Expiry Date Exercise price grant date
    C$ A$

    Series 1 3,751,431 05 Apr 07 05 Apr 09 0.8600 0.3011
    Series 2 4,429,678 13 Apr 07 11 Apr 09 0.8600 0.2743
    Series 3 613,582 20 Apr 07 20 Apr 09 0.8600 0.2868
    8,794,691
    b) Exercised during the period

    Share price
    Warrants series Number at exercise
    exercised Exercise Date date

    A$

    Series 1 1,000,000 28 Nov 07 1.4050
    500,000 03 Dec 07 1.3800
    500,000 07 Dec 07 1.3600
    1,000,000 10 Dec 07 1.3900
    751,431 13 Dec 07 1.3600
    Series 2 1,036,000 18 Dec 07 1.2800
    4,787,431
    c) Balance at the end of the period
    Exercise Fair value at
    Expiry / price grant date
    Options series Number Grant date Exercise Date A$ A$

    Series 2 3,393,678 13 Apr 07 11 Apr 09 0.8600 0.2743
    Series 3 613,582 20 Apr 07 20 Apr 09 0.8600 0.2868
    4,007,260
    Following a general meeting of the Company's shareholders held on 10 January
    2008 a resolution was passed to approve the issue of 5,600,000 share warrants
    with an exercise price of C$1.29 each and an expiry date of 23 November 2009.
    Share warrants are specific to the Company's listing on the Toronto Stock
    Exchange (TSX) and retain the same characteristics as share options but are
    referred to separately under the TSX listing rules.
    NOTE 12: Impact of reconciliation between Australian accounting standards and
    Canadian GAAP
    There are no material differences between the Income Statements, Balance Sheets,
    Statement of Changes in Equity and Cash Flow Statements presented under
    Australian accounting standards and Canadian GAAP.
    The Company would be required under Canadian GAAP to adopt the provisions of
    Sections 3855 (Financial Instruments - Recognition and Measurement), 3861
    (Financial Instruments - Disclosure and Presentation) and 1530 (Comprehensive
    Income) from July 01, 2007 which address the classification, recognition and
    measurement of financial instruments in the financial statements and the
    inclusion of other comprehensive income. These new standards require that the
    Company identifies all financial instruments and accounts for these financial
    instruments at their fair value. Costs associated at the recognition date with
    these financial standards can be either immediately expensed or offset against
    the fair value of the financial instruments.
    The Company has elected to expense all costs associated with the acquisition of
    financial instruments. Financial assets are classified as one of the following
    groupings: loans and receivables, assets held to maturity, available for sale
    financial assets or assets held for trading. Changes in the fair value of
    available for sale financial assets are taken to equity and reported in the new
    Statement of Comprehensive Income, until the financial asset is either
    derecognized or impaired, where it is then accounted for in the Statement of
    Operations. Changes in the fair value of assets held for trading are reflected
    in the Statement of Operations. Assets held to maturity and loans and
    receivables are measured at amortised cost. Financial liabilities are classified
    as either trading or at amortised costs. Comparative periods have not been
    adjusted to reflect the implementation of these new standards.
    In addition to recognising the unrealized fair value changes in available for
    sale financial assets in the Statement of Comprehensive Income, unrealized gains
    and losses on translating financial statements of self sustaining foreign
    operations, unrealized gains and losses on foreign currency translation
    associated with hedges, donations from non-owners and appraisal credit
    increases are also recognized in the new statement.
    As the company does not presently hold any financial instruments for which
    amounts would be required to be recognised in a Statement of Comprehensive
    Income, this statement has not been presented in this report.
    This information is provided by RNS
    The company news service from the London Stock Exchange
    END

 
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