Annual Report • Aug 29, 2008
Annual Report
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International Gold Exploration IGE AB
INTERNATIONAL GOLD EXPLORATION IGE AB
| Content | 3 |
|---|---|
| This is International Gold Exploration IGE AB (Publ) | 5 |
| Summary of 2007 | 7 |
| Comments from the Chief Executive Officer | 10 |
| About International Gold Exploration IGE AB | 13 |
| Summary | 13 |
| Vision | 13 |
| Strategy | 13 |
| Business Concept | 13 |
| Governance | 13 |
| Social and environmental responsibilities | 14 |
| Business Outlook | 14 |
| Group Overview | 14 |
| IGE and the stock market | 15 |
| Operations | 16 |
| Risks related to exploration and mining activities | 17 |
| The metal market | 18 |
| Gold | 18 |
| Nickel | 19 |
| Diamonds | 20 |
| IGE Diamond AB | 15 |
| Angola | 23 |
| Project overview - Angola | 24 |
| Luxinge | 24 |
| Lacage | 24 |
| Luanguinga | 26 |
| Cariango | 26 |
| IGE Africa | 29 |
| Kenya | 29 |
| Project overview - Kenya | 30 |
|---|---|
| Kilimapesa | 30 |
| South western Kenya | 30 |
| North western Kenya | 32 |
| Burundi | 35 |
| Project overview - Burundi | 36 |
| Mukanda | 36 |
| Butara | 36 |
| Kabarore | 37 |
| IGE Nordic - Scandinavia | 39 |
| Project overview – Nordic | 40 |
| The Rönnbäcken Nickel Project (Sweden) | 40 |
| The Bidjovagge Gold-Copper Project (Norway) | 41 |
| Corporate Governance | 45 |
| Environment | 48 |
| Corporate Social Responsibility | 49 |
| The Share | 51 |
| Administration's report | 55 |
| Income statement - Group | 60 |
| Balance sheet - Group | 61 |
| Cash flow statement - Group | 63 |
| Income statement – Parent company | 64 |
| Balance sheet – Parent company | 65 |
| Cash flow statement – Parent company | 67 |
| Notes | 69 |
| Auditors report | 91 |
| Board of Directors | 93 |
| Group Management | 95 |
| Glossary | 98 |
| Contact info | 99 |
International Gold Exploration IGE AB (IGE) identifies, develops, and refines mineral resources in Africa and Scandinavia. Defined mineral resources are targeted either to be sold or brought to production under the Company's own control or through a partnership".
International Gold Exploration IGE AB ("IGE") is a Swedish exploration and mining group with activities in Angola, Kenya, Burundi, Sweden and Norway. The group's main assets consist of a number of licenses with potentially economically viable deposits of base and/or precious metals and diamonds to mine.
IGE's headquarter is located in Stockholm. The IGE share is listed on the Oslo Stock Exchange and on the Swedish NGM Equity list.
Our vision is for the IGE Group to become a profitable mining company and an important operator on the international mining scene.
International Gold Exploration IGE AB
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| Domicile: Stockholm |
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| Ticker: IGE |
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| \$PVOUSJFTPGBDUJWJUJFT Angola, Kenya, Burundi, Sweden and |
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| 8FCTJUFwww.ige.se |
| &NBJMBEESFTT [email protected] |
Annual General Meeting: May 6, 2008, Stockholm IGE will report results during 2008 according to the following financial calendar.
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| GROUP SUMMARY | |||
|---|---|---|---|
| (TSEK) | 2007 | 2006 | |
| Revenue | 293 | ||
| Profit | $-62529$ |
$-36404$ | $-23207$ |
| Fixed assets | 118898 | 67 440 | 736 |
| Current assets | $\sqrt{144}$ 801 | 156 010 | U3d |
| Equity |
244899 | 218 108 | 120 859 |
| ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, | |||
| Cash flow for the period |
$-8757$ . |
81 917 | 49 866 |
| Solidity | 92.9% | 976% | |
| Investments | 62 770 | 19 701 | 15 656 |
As CEO of the International Gold Exploration IGE AB Group (IGE), I feel very confident regarding the potential of the Group's project portfolio. The Group faces many interesting challenges in the upcoming year. Finding the proper financing is one of them; allocating the necessary human resources and equipment in order to start the production is another. The whole IGE team is working hard to secure this, and we are well on our way, although we still have a long way to go.
We are a Swedish company well on its way to commence production of diamonds and gold on the African continent, very different from the market conditions that we are familiar with in Scandinavia. Angola and Burundi have emerged from many years of civil war, offering a variety of interesting investment opportunities for those who are willing to take higher risk with potential higher return. We are willing to do that, and I feel confident that we will succeed.
The main reasons for my conviction are the following: IGE offers a very interesting investment case, with a potential of great leverage on invested capital within a relatively short time period. We are a strong team of competent employees, with extensive local experience of each geographical area in which we operate, and the motivation and confidence in success among our employees is very solid. We have, as a Swedish operator, a very good reputation almost everywhere in Africa, particularly in Angola, where Sweden historically has been a big foreign-aid contributor, along with immaculate neutrality. As a part of our engagement in the countries we are present in, for example in Angola, we initialized an educational programme, together with the government, in order to increase the geological competence within the country. The Group's activities in Africa are balanced by the operations of IGE Nordic, which are carried out in a well known geographical area with favourable conditions, seen from a mining legislation perspective, political stableness as well as an infrastructure perspective.
The potential of IGE Nordic is also very big, which is one of the reasons why we have allocated a dedicated team in order to secure the development of our projects in the Nordic region in the best possible way, separately from the Parent Company's small organisation.
The past year has seen continued progress in IGE's growth and development. Activities were primarily focused on Angola, where a number of significant additions were made to the Company's Diamond project portfolio. In addition to the activities in Angola, the Group managed to spin-off a part of its subsidiary, IGE Nordic AB, in a combination with a listing of the Company on Oslo Axess. The transaction resulted in a strengthening of the cash situation in IGE Nordic of about 88 MSEK. This was carried out despite a down-trending market, by hard, targeted work in combination with the offering of an interesting investment case. The Group has completed the separation of its activities into three well defined business units: IGE Nordic AB, IGE Diamond AB and IGE Africa. Each business unit is responsible for its own operations, within its defined geographical area or commodity.
Two significant developments during the financial year were the granting of additional licenses in the provinces of Lunda Norte and Kwanza Zul in Angola. The province of Lunda Norte is currently the host of the fourth largest diamond producing mine in the world, Catoca. The area has a solid potential in terms of diamond production. Besides the work related to obtaining additional licenses, IGE has also, during 2007, completed its first airborne surveys over its licenses in the Moxico province, Luanguinga and Lacage. This is a big step forward for the Group in terms of kimberlite exploration activities. The results from the surveys are very promising and confirm previously reported positive data from studies carried out by Condiama (a joint venture between the Portuguese state and De Beers) in the 70's. None of the Lacage or Luanguinga identified kimberlite
structures have ever before been evaluated on an adequate scale or with modern techniques. IGE's primary focus in the Moxico province is to identify and evaluate the kimberlites in the fi eld with the best economic potential as rapidly as possible. We have now selected potential kimberlites to be further analysed. We have started a risk assessment in order to fi nd out the need of mine clearance and drilling activities during autumn 2008. Th e Company has several additional geophysical targets to examine, which might lead to new discoveries and thereby to an increased number of identifi ed kimberlites within the Company's licenses as exploration continues in 2008.
In terms of alluvial activities, IGE has ordered a mobile bulk sampling plant, which will be delivered to the Luxinge concession in Lunda Norte by summer 2008. It will be a key asset for IGE in the eff orts to start up alluvial diamond production in Angola. Th e fi rst bulk sample material is expected to be processed during the second half of 2008.
In IGE Africa, the Group has, during 2007, employed a highly qualifi ed manager for the Kenyan and Burundian activities. In July 2007, IGE has entered into a joint venture agreement with Goldplat Plc (50-50 percent owned), a South African gold producer specialised in small scale mining. Th e operations in Kenya, with 30 employees, are promising and we are through the joint-venture aiming to reach a small scale gold production within our Lolgorien license together with Goldplat Plc during 2008. IGE's goal in Kenya is to identify at least on million troy ounces, and an extensive drilling program will start during 2008. Th e Burundian activities have consisted of starting fi eld exploration activities through the recruitment of a qualifi ed management and geology team. IGE Burundi SA now employs about 20 people and exploration activities have been initiated within the Company's licenses in Burundi with focus on gold and vanadium. Th is has been carried out in combination with a focused work towards obtaining additional licenses of interest in Burundi. Th e negotiations are fi nalised and IGE will hopefully obtain the signed licenses during 2008.
We are working hard to fi nd the proper fi nancing of our diff erent projects. We are a lot closer to providing a positive cash fl ow from some of our projects, on project basis, but we are not there yet. As we have now intensifi ed our work in Angola, Kenya and Burundi, our rate of investment has increased signifi cantly during 2007. In order to speed up our projects and to secure both fi nances and access to necessary competencies, IGE has initiated negotiations with partners within a selection of its projects. I am convinced that the outcome of these potential collaborations will benefi t the operations of the Group in best possible ways and strategic partnerships are part of IGE's strategy.
Th e Group is, from an operational perspective, well positioned to take advantage of its existing business opportunities and its strong relationship with authorities in the respective country of activities respectively. I am, along with the rest of the employees within the IGE Group, looking forward to an exciting 2008.
Tomas Fellbom CEO, International Gold Exploration IGE AB
International Gold Exploration IGE AB ("IGE" or "the company") is a Swedish exploration and mining group in a phase characterized by strong growth. IGE is engaged in the search, acquisition, exploration and development of high-quality diamonds and precious/non-precious metal projects with potential for high economic commercial value. IGE is active in Scandinavia and Africa. Th e company's shares are listed on the Oslo Stock Exchange and on the Swedish NGM Equity list, with a current market capitalization of around MSEK 670. IGE holds a portfolio of large exploration acreage licenses for diamonds and precious/nonprecious metals in highly prospective areas in Scandinavia and Africa.
In order to increase the focus on each project and to elucidate shareholder value, IGE has during 2007 divided its organization into three separate business units – Diamonds, Africa and Nordic.
IGE Diamonds has through its wholly-owned Angolan subsidiary IGE Ltd obtained a strategic position in Angola, which is the world's fourth largest diamond producer and is believed by many experts to host the world's next major kimberlitic mines. IGE has through its large scale license holdings as well as its unique long-term relations with the government and the state owned mining company, Endiama, rapidly become a strong operator on the diamond exploration scene in Angola. IGE is today the third largest license holder in the country.
IGE Africa has licenses for gold and base metals in Burundi and Kenya. Revenue is expected to initially come online from small scale production during 2008 from gold and colombo-tantalite projects coming into production. IGE combines the small scale production activities with extensive exploration programmes in both Kenya and Burundi, and is continuing its pending negotiations regarding additional licenses within Burundi.
Th e Nordic projects have been listed through IGE Nordic AB on Oslo Axess, during the year. Th e Group has, in connection to this transaction, added to the Company both an experienced new management team and board members. Th e Initial Public Off ering (IPO) raised over 88 MSEK to IGE Nordic by the end of 2007. IGE Nordic thereby has a large and diversifi ed portfolio of gold, nickel and copperzinc-silver exploration projects in Sweden and Norway in combination with a cash balance that is enough to promote the prioritized projects during the coming 24 months. Th e conditions for mining in terms of infrastructure, legislation
and fi nancing are, in Sweden and Norway, by many aspects relatively favourable as the region has a long tradition of mining. IGE Nordic AB is currently well positioned to achieve its long-term objective of becoming a leading exploration and mining company in the Nordic countries, delivering value to its shareholders and to the communities where it operates.
IGE has proven its strength in recognizing value in an early stage, by investing in projects that have a high probability of success based on historical data/mining and which are capable of achieving optimal shareholder value with an acceptable degree of risk.
Our vision is för the IGE Group to become a profi table mining company and an important operator on the international mining scene.
In order to achieve its long-term objective, IGE's strategy is:
IGE identifi es, develops, and refi nes mineral resources in Africa and Scandinavia. Defi ned mineral resources are targeted either to be sold or brought to production under the Company's own control or through a partnership.
When the economic viability of a deposit has been established IGE can among other alternatives choose to either develop the deposit on its own or seek joint venture partners in order to gain access to investment capital or extra competence.
IGE strives to earn and retain the trust of shareholders through a solid commitment to sound and eff ective corporate governance.
The company and the Board recognize the importance of corporate governance in the effective management of the company and in the protection of its stakeholders and shareholders. The company's approach to significant issues of corporate governance is guided with a view to ensuring that the business and affairs of the company are effectively managed so as to enhance shareholder value.
IGE and its subsidiaries are committed to conduct their business in accordance with all applicable laws, rules and regulations, and the highest ethical standards.
IGE is also dedicated to creating and maintaining a safe environment for both the land it occupies and the people who drive its success. The company's policy is to conduct its operations while protecting the environment, the health and safety of its employees, and the public.
IGE practices socially and economically responsible discovery, development and exploitation of mineral resources, for the benefit of its employees, shareholders, business partners, neighbours and other stakeholders. In all its activities, the company is committed to upholding high ethical standards, working in a responsible and safe manner, and overall being a good corporate citizen.
IGE's present activities span from Northern Europe to Sub-Saharan Africa. In Africa, the Company is developing projects in three countries: Kenya, Angola and Burundi; all of which are experiencing rapid change, where the national policies increasingly favour international investments, and where extensive mineral resources provide opportunities for economic development. IGE's commitment to working in these countries is strong, as evidenced by the rapid growth of the respective IGE country offices. Furthermore, the company's investments and initiatives in these countries have always extended further than the exploration and mining projects themselves. For example, support has been provided to needy and vulnerable communities; and initiatives have been taken to develop local skills and capacity in the fields of exploration and mining. These initiatives are part of IGE's overall commitment to deliver benefits to its stakeholders and to society at large.
Exploration and mining may provide considerable returns for investors, people working in the sector, and society at large. The risks entailed can, however, be significant and UIFTFJODMVEFQPMJUJDBM
FOWJSPONFOUBMBOEmOBODJBMSJTLT5P effectively address and manage these risks, and to further improve and develop the work related to community support and skills development, IGE has embarked on a process of establishing goals and systems for following up on our social and environmental responsibilities and activities. The result will be a framework for Corporate Social Responsibility (CSR), and its subsequent implementation and continuous development will be a prioritized company activity in the years to come.
The principal business of IGE is the acquisition, exploration and development of high-quality metals and mineral projects with potential for economic commercial value. IGE is currently focused on properties in Angola, Kenya, Burundi and Scandinavia. Investments must, in order to be considered, have a high probability of success based on historical data/mining and must be capable of achieving optimal shareholder value with an acceptable degree of risk.
Commodity markets remain strong, underpinned by supply restrictions and a generally constructive global economy. Growth in Asia will help drive the global economy, with Japan's expansion now well-established and China's economic growth expected to remain strong. Forward prices of LME metals remain above long-term historical averages, indicating that large-scale supply surpluses are not being anticipated in these markets.
Urbanisation and industrialisation are taking place across the developing world, leading to a worldwide change in commodity demand that is different from the traditional business cycle. IGE's business strategy recognizes this probability and we are positioned to realize the potential benefits from a multi-decade secular change in demand for commodities.
The Company has activities in Angola, Kenya, Burundi, Sweden and Norway. The Group consists of a holding company, and a number of subsidiary companies responsible for the exploration and production within respective geographical or commodity oriented areas.
IGE Diamonds AB was established during 2007 to manage joint ventures and the business development strategy for its 100 percent owned Angolan subsidiary IGE Ltd's mining operations, and for its geological services entity in Angola, IGE Angola Limitada (registration pending). IGE Ltd is striving to become a major diamond miner within 3-5 years with a portfolio of strategic kimberlite and alluvial diamond concessions in Angola.
IGE Africa manages IGE operations in Kenya and Burundi. Activities in these two countries are in turn managed by two separate subsidiaries. IGE's Kenyan operations are run through IGE's 100%-owned subsidiary Sebimu Mining & Exploration Ltd (namechange to "IGE Kenya" is pending), and IGE's Burundi operations are run through IGE's 90% owned subsidiary IGE Burundi SA.
The Nordic activities are carried out by the partly owned subsidiary IGE Nordic AB. IGE Nordic's main business activity is exploration of mineral resources in the Nordic region, with the aim of starting mining operations for the extraction of these minerals in the medium to long term. An IPO followed by a listing of IGE Nordic on the Oslo Axess list was successfully completed by the end of 2007. As a result of the IPO, the Parent Company, International Gold Exploration IGE AB, holdings in IGE Nordic was diluted by 25.4 percent. By the end of 2007, IGE consequently owned 74.6 percent of IGE Nordic. After the IPO, IGE Nordic has about 300 shareholders.
The Company is listed on the Oslo Stock Exchange SMB list since 1997 and on NGM Equity in Stockholm since 2005. The Company has 341,000,000 outstanding shares of a single type. The shares have a nominal value of 0.05 SEK. They are registered at Nordic Central Security Depositary (VPC in Sweden and VPS in Norway, central clearing organizations for stock and financial instruments) under the ISIN code SE0000378119
The total nominal value of the shares is SEK 17,050,000. All shareholders qualified to vote are given votes according to the total number of shares they hold, without limitations. Each share has equal rights to the profit and assets of the Company.
As the Group has decided to focus on development of a selection of its most promising exploration licenses, the level of early stage exploration activities has decreased. Th e Group still considers it important to have a balanced portfolio of assets, distributed among the diff erent phases of the exploration and mining process. It is an adjustment between the fact that it is essential for the Group not to risk everything on one or two projects and the need to focus and prioritize among the projects in order to advance them and show results. In the short term the Group is mainly focusing on the projects listed below. Following projects, the supply of funding and the result of the development of the diff erent projects will aff ect the internal priority among the below projects.
Exploration is a process, whereby various methods are used to investigate an area of land in order to locate a mineral deposit of interesting size. Once a deposit has been located the process is started to ascertain the size and mineral content as well as the feasibility of a prospective mine. Usually, the exploration work is led by geologists, and often starts with a discovery of a mineralization in outcropping rock or boulders, observations of the direction of ice movement or after confi rmation of previous small-scale mining. Th e exploration work diff ers between diff erent types of geological environments and diff erent types of minerals. Th e fundamentals of exploration activities can, however, be outlined as follows:
t Pre-exploration. Analyses such as investigation of
exposed areas, mineral databases, old mines, aerial magnetic survey maps, ice movement direction etc.
Exploration is a fundamental part of the operation of all mining and metal companies, since the production of metal is dependent upon the continual addition of new deposits. Exploration is, at the same time, the part of the mineral extraction process which carries the highest risk, as there is never a guarantee that the work will result in new, profi table deposits.
| Projects | Ownership (%) | Resources | Historical resources |
|---|---|---|---|
| IGE Diamonds AB | |||
| Alluvials; Proven Indicated: 249,151 carats / | |||
| Luxinge (Diamonds) | 31.5 alluvial/30.75 Kimberlite | Inferred: 759,000 carats | |
| Lacage (Diamonds) | 40 alluvial/43 Kimberlite | n/a | |
| Luanguinga (Diamonds) | 35 alluvial/43 Kimberlite | n/a | |
| Cariango (Diamonds) | 40 alluvial/43 Kimberlite | n/a | |
| IGE Africa | |||
| Kabarore (Colombo-tantalite) | Option to acquire 51% | n/a | 3 - 6 M lbs Ta2O5 |
| 17M tonnes @ 0.64% V (currently | |||
| Mukanda (Vanadium) | 100 | being re-confi rmed under NI43-101) | |
| Butara (Gold) | 100 | n/a | |
| Kilimapesa (Gold) | 50 | 51,648 tonnes @ 2.52 g/t Au | |
| SW Kenya (Gold) | 100 | ||
| NW Kenya (Gold, Nickel) | 100 | 5M tonnes @ 1% Ni | |
| IGE Nordic AB | |||
| Rönnbäcken (Nickel) | 100% | Nickel | |
| 1.16 Mt grading 1.09% copper and | |||
| Bidjovagge (Gold-Cupper) | 90% (Geologiske Tjenester A/S 10%) | Gold-Copper | 3.72 g/t gold |
| Mjölkfjället (Nickel) | 100% | ||
| Indicated resources: 568,000 t @ 4.9% Zn, | |||
| Norra Norrliden (Zink-Cupper) | 10% (Lundin Mining Co 90%) | 0.4% Pb, 0.8% Cu, 0.9 g/t Au and 59.7 g/t Ag; |
Th ere is inherent risk in all exploration activities. Despite extensive experience and using true-and-tested methods, there is always a risk that valuable minerals are not found to the extent necessary to ensure profi table mining. Calculations of mineral resources are built on assumptions and estimates, which to a large extent are based on probabilities. Furthermore, there is a risk that the size of the mineral resource does not match previous calculations.
Such things as changes in metal prices strongly infl uence the profi tability of all mining and exploration companies. Metal prices fl uctuate over time depending on supply and demand etc. Commodity prices in general are also infl uenced by the state of the economy, crises, confl icts and the world political situation. Most metal prices are quoted in US dollars, which mean that the income will, to a large extent, be a function of the SEK/USD exchange rate. Similarly, the part of the Company's operations located in Africa will be infl uenced by the exchange rate between SEK and the currency used at the location of IGE's activities.
Mining and prospecting activities are closely monitored by authorities, based on applicable mining laws and environmental regulations, for instance in Sweden "gruvlagen" (the mining law), "naturvårdslagen" (law for care of nature)," miljöskyddslagen" (environmental protection law) and "lagen om förfarandet vid miljökonsekvensbedömning" (law of procedures for evaluating environmental impact). Th e road from fi nding a deposit to active mining is often long and arduous. Th ere are many applications and approvals that have to be granted during the process, and these can complicate, delay or stop the mining. IGE deals with this by having an experienced team of geologists and consultants, who have been part of several successful mining projects. Furthermore, the company works closely with the authorities in the various countries of operation, which keeps IGE abreast of revisions in the laws etc.
Th e rapid growth of the global economy that we have seen over the last few years, mainly driven by China and India, has been well refl ected in the raw material markets. As these economies have invested heavily in infrastructure and industry capacity, the demand for energy and base metals has risen sharply. Supplies have, however, lagged behind, resulting in dramatically increased commodity prices.
China now consumes 40 percent of the global steel production, is second only to the US in oil consumption and is single-handedly responsible for the record prices of copper. However, the recent turbulence in stock markets around the world seems to have had a cooling eff ect on the global economy. Th e short- term outlook for base metal prices is that they may lose some shine. (Source: Brookhunt)
Below follows a brief description of the two most important metals for the activities of the IGE Group; Gold and Nickel.
Gold has entered a strong bullish trend and is expected to remain bullish in 2008. Weakness of the US dollar and rising infl ation support the gold price, but the main reason for gold's bullish trend is predominantly the supply/demand fundamentals. As uncertainty about the current global economy continues to rise, so does gold. And since gold supplies have been nearly fl at for the past two years and may actually start to decline going forward, the outlook for gold looks very promising.
Jewellery is the largest component of demand, accounting for around 64 percent of the total. Dentistry, electronic and other industrial applications, collectively referred to as non-jewellery fabrication demand, accounted for a further 18 percent. Purchases of physical gold for the purposes of investment by private individuals accounted for 7 percent of the demand.
In 2007, global gold supply rose by 2.8 percent to 4025 tonnes compared to the prior year, but is expected to remain fl at at 4000 tonnes until 2015. Mine production accounts for 64 percent of this total of which around 85 percent is derived from primary gold mines which derive most of their revenue from gold rather than co-product metals. Th e balance of 36 percent is made up by net central bank sales of 328 tonnes and scrap supplies of 1,115 tonnes.
South Africa is the largest producer of gold, accounting for 12 percent of global mine supply, but is followed closely by
the United States, China and Australia, who each have a 10 percent share of the total. Th e fi ve largest gold mining companies collectively account for 34 percent of global mine production.
In 2008, global gold demand is estimated to increase by 3.2 percent relative to 2007, and is expected to continue rising by between 3 and 6 percent annually until 2014.
Year-to-year variations in the consumption of gold in jewellery fabrication are driven by numerous factors, but most importantly by the prevailing economic climate and the price of gold. Over the longer term such issues as changing consumer tastes also plays a large part.
India is by far the largest single jewellery fabricating country, accounting for around 21 percent of global demand. In India, gold jewellery is besides adornment also an important means of storing personal wealth. As a luxury consumer item, gold jewellery demand in Western countries is dictated by economic conditions, changing broadly in line with GDP growth.
Since 1999, prices have increased substantially in response to decreasing production. Th e Washington agreements, which have constrained offi cial sector sales, a weaker US dollar and an increase in perceived geopolitical and economic risks due to terrorism, have all contributed to this price increase, not to mention rising oil prices and concern over instability in fi nancial markets.
A new wave of integrated nickel projects will keep growth at an average of around 6% through to 2012, but is thereafter expected to fall. The influx of new material from a number of nickel projects expected to come online within the next few years could leave the global market over supplied but this is expected to return to balance around 2013. By then, if no new nickel sources come online the nickel market is expected to tighten up significantly, pushing nickel prices higher. Ergo, there is still plenty of room for nickel companies to invest in mining and refining projects in order to meet the long-term demand.
Nickel is highly dependent on a single first-use market – stainless steel. As the steel market is expected to improve over the next few years, nickel demand will remain strong. The sustained rapid expansion of the Chinese stainless steel industry is a major factor for the primary nickel consumption to continue growing at between 8-10%.
The market outlook for nickel is that we might see global market over supply during the next four years, before sliding into deficit. An increasingly tight nickel market due to the anticipated strong demand for nickel can only be offset by the additional contribution from as yet "unidentified" production.
Diamonds are an important commodity within the activities of the IGE Group. Th e Group's entire operation in Angola is based on exploration and production of diamonds. Below follows a brief description of diamonds and the diamond market:
Diamonds are formed as pure crystals of carbon deep within the earth, starting up to 3.3 billion years ago, under conditions of extreme heat and pressure. Some are then brought to the surface in a rising magma which solidifi es into igneous rock which forms the primary deposits of diamonds. Today there are over 6,000 known kimberlites in the world of which 850 contain diamonds, but only 50 of them are economic in terms of diamond mining. Africa is considered to be favourable and thereby very interesting in terms of providing diamondiferous kimberlites. South Africa and Botswana currently hosts several of the largest deposits. Angola, which is still relatively unexplored due to its long history of civil war, is the host of the fourth largest diamond mine in the world, Catoca.
Th ere are several variables that aff ect the price of a rough diamond. Th e prices of one carat vary, dependent of the quality of the diamond, from about USD 50 per carat to about USD 600 per carat. Diamonds are available in varying colours, sizes and qualities. Th ey naturally occur in colours ranging from very clear fi ne whites to pinks, bright yellows, greens and browns. Th e majority of diamonds used in jewellery today are white diamonds.
Th e value of a white diamond is determined by what are commonly referred to as the 4C's. Th e 4C's are the Diamond's Cut, Colour, Clarity and Carat. Each of the 4C's is important; the most valuable diamonds are those that possess the best of all four measurements.
Th ere are currently approximately 30 producing primary diamond mines in the world. Th e major diamond producing countries are Botswana, Russia, Angola, South Africa, Namibia, the DRC, Canada and Australia. Th e total rough diamond production in 2006 was estimated to be approximately 158 million carats, with a total value of around USD 13 billion. Botswana accounted for about 24 percent of the world's rough diamond production by value, of which more than 90 percent was produced by its two largest mines,
Jwaneng (63%) and Orapa (27%). Th e world's fourth largest mine Catoca, located in Angola, sold 6,035,843 carats at a total value of USD 425.8 million.
Diamond supply is generally expected to remain fl at for a few years and thereafter begin a decline as world resources and reserves decrease over the next decade. Th e current rate of new discoveries is low and those who are found have a lead time of about six years from the announcement of the discovery of a major new resource to full production. However, it is anticipated that supply from certain African countries, such as Angola, DRC and Botswana will grow in the medium term.
Th e US will remain the main driver of diamond jewellery demand in overall terms, but the developing economies of China, India and the Middle East are collectively expected to contribute signifi cantly to future demand. Diamond demand growth rates in these markets are expected to exceed the growth rates in the USA and Europe, and industry marketing activities are expected to stimulate demand for diamonds across the market as a whole. Th erefore, it is anticipated that the supply and demand situation will support and enhance diamond prices in the medium term (source: Ambrian, BMO Capital).
Apart from industry consumer marketing activities, a key determinant of rough diamond demand is the macroeconomic climate, as growth in diamond jewellery demand is closely correlated to factors such as GDP, consumer disposable income and the strength or weakness of local currencies as diamonds are priced in USD.
Th e size of the global market for diamond jewellery in 2006 was estimated at USD 71 billion in retail value and USD 19 billion in polished diamond value, with North America representing about half of this total value. Consumer demand for diamond jewellery has seen a steady increase from 2001 onwards 3.4% with rough diamond prices having increased in line 2.5% (source: Ambrian).
Based on publicly available information, the outlook for the supply-demand balance in the rough diamond industry appears robust with demand forecast to exceed supply. Th e confi dence in this sustained demand is based on a number of factors:
1) Growth in the global retail diamond jewellery market
as a result of investment in diamond marketing and promotion by the industry as a whole
Diamond price increases have not followed the recent bull market for commodities which is being driven by industrial demand from rapidly expanding economies such as China and India. It remains that diamond prices are still largely determined by consumer supply and demand fundamentals and do not grow at rates comparable to other commodities.
Coming out of almost three decades of civil war ending in 2002, Angola's economy has seen a rapid expansion over the last few years. Today, it has one of the highest growth rates in the world, peaking at 26 percent in 2006. Its rich reserves of oil and diamonds have helped put the country in the international spotlight and there is currently signifi cant foreign investment coming into Angola. Th is
is not least from foreign mining companies that are now actively pursuing investments in the country.
Diamonds were fi rst discovered in Angola in 1913 and the major identifi ed resources to date are located in the remote Lunda Norte province, near the border of the DRC. Angolan diamonds are found in two areas, alluvial diamonds, which are washed out from volcanic pipes known as kimberlites, and kimberlite pipes. Kimberlite diamond mining is the most profi table area for large scale mining. However, the cost of kimberlite mining is great and therefore large mining companies have been reluctant to undertake such investments considering Angola's volatile economic and political history. Th e country's diamond reserves are considered extensive and particularly marketable, with approximately 70 percent classifi ed as gem quality, 20 percent as near gem quality and only 10 percent as industrial.
Angolan mining regulations have recently been liberalized and the government is running a campaign to attract foreign investment. It is widely considered that Angola may hold some of the world's largest undiscovered kimberlite and alluvial diamond deposits. Th e country is one of the most prospective countries for diamonds globally with rough diamond sales of 9.4 million carats which generated USD 1.2 billion in 2006 (source: IDEX). As the Angolan diamond industry continues to gather momentum, IGE believes that Angola will be one of the world's top-three diamond producers within fi ve years.
Th e Lunda Norte province hosts the Catoca mine which is the world's fourth largest kimberlite mine. In 2005, the mine produced around 4 million carats with sales revenues of approximately USD 250 million. Th e Catoca mine is situated only 30 kilometres northeast of IGE's Luxinge concession area.
Challenges remain with regards to the operating environment, but the development of the country is rapid and Angola is continuously showing improvements in terms of legislation, infrastructure etc. Of major importance is the recent government approval for construction of a hydro-electric station in the Lunda Norte province which will be able to serve several local diamond mining operations. Th is source of power could help to signifi cantly cut operating costs for the mining industry.
IGE has been present in Angola since 2005. Th e management of IGE discovered early on the large potential of the country, in terms of diamond deposits, and immediately started a focused work towards establishing relations with the government in Angola. Since the end of the civil war in 2002, the country has experienced somewhat of a boom of foreign investors standing in line to obtain commodity licenses within the country. Th anks to IGE's local management, and the long-term relationship between Angola and the Swedish government, which has been a large development aid contributor etc, IGE has established a good relationship with the country's authorities. Th e Company has rapidly managed to reach a strong position in Angola, which many before have failed to attain. IGE has through its present large scale license holdings in Angola rapidly become a strong operating company on the diamond exploration scene in the country. IGE is presently noting an increasing interest from the world's major diamond companies for direct contacts and discussions regarding joint developments of the Company's attractive license holdings.
IGE is the third largest license holder of diamond concessions in Angola, with a portfolio of strategic concession areas. Th e Lacage and Luanguinga projects in the Moxico region of eastern Angola were the fi rst licenses granted to IGE, each with an area of 3,000 km2. In 2007, IGE was granted another two concession areas, Luxinge in the Lunda Norte region of north eastern Angola and Cariango in the Midwestern region of Cuanza Sul, both strategically located within the Lucapa Graben corridor of Angola, the country's most diamondiferous region.
Luxinge is IGE's most imminent project and operations in Luxinge are at an advanced stage. Production of alluvial diamonds and generation of positive cash-fl ow on project basis is expected to commence as per the second half of 2008.
With the Luxinge concession, IGE is strategically positioned in the attractive Lunda Norte region within the Lucapa Graben corridor, the most well-known diamondiferous area in Angola and host of the world's fourth largest hard rock mine, Catoca. Th e size of the concession area is 160 km2 and the diamond-rich Chiumbe River is crossing the concession over a length of 7 km. Th e surplus generated in Luxinge will be used for further fi nancing of exploration of the concession as well as the company's other diamond projects in Angola.
Th e acquisition of the Luxinge concession was made in 2007 through the signing of a joint venture agreement with the Belgian group MacDiamond in which IGE acquired 75% of MacDiamond's interest in Luxinge, which resulted in IGE holding about 31.5% of the alluvial part and 30.75% the kimberlite part of the total project.
In October 2004, the South African mining company JCI did a pre-feasibility study for the Luxinge alluvial project and estimated the average grade of tributaries at 0.21 carats/ m³ and at 0.15 carats/m³ for the Chiumbe River. Indicated resources were estimated to 130,719 m³ and the total alluvial diamond resource at 750,000 carats.
Based on Diamang (predecessor to Endiama) exploration data of the Luxinge area and on the JCI pre-feasibility study, Endiama's mining engineers and geologists have also reviewed the estimated production and the expected mine life. Th ere is signifi cant potential to increase these resources after the reassessment of the data/airborne survey. Th e estimated life of the alluvial mine is fi ve years. Th is estimation takes into account the increase of the rate of production in 2009, additional discoveries of the Calonda formation (an extensive formation that covered large parts of north eastern Angola and adjacent parts of the DRC. Th e Calonda formation, Kwango formation in the DRC, is the principal secondary source of diamonds where developed in areas both proximal and distal to kimberlitic sources) diamonds deposits and the mining of the Chiumbe River fl ood plains.
A bulk sampling program of 6 months is to be implemented for confi rming diamond sizes and the average price per carat. Th e expected recovery rate is 85 percent. Th e target is to double production fi gures over the fi ve-year miningphase period from the initial 75,000 carats per year, given that the exploration results of the already identifi ed Calonda formation diamond deposits are positive. Also, an increase in mining equipment capacity is necessary in order to accomplish this. Th e production increase will enhance the project's economy of scale and increase margin.
Th e quality of the Luxinge alluvial diamonds is high. Based on available diamond samples, JCI have estimated the average price per carat to USD 205. Th e Transhex (Luarica) and ITM Mining mines (Chitotolo) are neighbouring the license area. In 2006, Luarica reportedly produced 79,687 carats which was sold at USD 291.16 per carat while Chitotolo produced 28,018 carats worth USD 229.96 per carat.
Earth-moving equipment and a mobile processing plant is expected to be mobilized and delivered during the second quarter of 2008. If everything goes according to schedule the start-up trial mining phase will begin during the summer of 2008. Furthermore, an airborne survey within the concession area for kimberlites is planned for August 2008.
kimberlite-like structure of 300 hectares, which would make it one of the largest known kimberlites in the world.
At Lacage, in the Moxico region of eastern Angola, IGE is strategically positioned with a concession area of 3,000 km2. The licenses cover both alluvial and kimberlite deposits. The area is previously unexplored by modern techniques and has recently been identified as having geology highly prospective for diamonds.
In 1917, Diamang started a diamond exploration programme in the Moxico province with special focus on the Upper Zambezi. Half of the diamonds recovered in this region between 1921 and 1953 are reported to have been of gem quality. In 1975, Condiama ( JV between a Portuguese state-owned diamond company and De Beers) subsequently discovered 4 kimberlites close to the Luio River and recovered diamonds from a 35 cubic-meter sample in the Luio River adjacent to these kimberlites (29 diamonds, totalling 6.64 carats). These 4 kimberlites are inside the boundaries of the Lacage project.
Aerial geophysical surveys carried out by GTK (Geological Survey of Finland), on behalf of IGE, that were completed on August 5, 2007 have confirmed the existence of very large sized kimberlite fields with more than 100 possible geological kimberlite structures larger than 7 hectares of which 13 are larger than 50 hectares. The results from the aerial survey confirm the Condiama reports of the early 1970's. From regional geological data it is noted that the Lacage area is located within geological potential ground to host kimberlites and large areas also identified as potential alluvial deposits.
The probability of having diamondiferous kimberlites appears to be more than 50 percent according to systematic and recorded samplings done before 1975 on the ground. Attractive anomalies are at a depth range that varies from 80 to 150 metres.
IGE has a 40 percent share in the alluvial part of the project and a 43 percent share in the kimberlite part of the project, with Endiama as the other major partner.
IGE's main target at Lacage is to determine the existence
of kimberlitic diamonds, and whether these kimberlites are economically viable to mine. Statistically, the outlook for the discovery of a new diamond-bearing kimberlite is promising, given the unusually large number of possible kimberlites at Lacage. The drilling programme set out for 2008 will be able to determine the possible existence of diamonds at these sites.
Following the kimberlite discoveries done by the aerial survey, IGE is planning for early ground testing, including in-depth drilling, of six high-priority targets in the southern parts of the Lacage area. The targets correspond to the previously recorded kimberlites with addition of the newly identified kimberlitic targets located nearby, in the upper drainage parts of the Luio River. Recent ground checks of the area show that the selected targets have not been affected by landmines from the civil war.
However, for safety reasons IGE has commissioned the Norwegian People's Aid to do a risk assessment survey of both license areas in order to confirm any remaining landmines. The survey will begun March 1 and results are expected towards end of the second quarter. The Angolan Government will see to it that any landmines are removed.
At Luanguinga in the Moxico region of eastern Angola, IGE has an interesting concession area of 3,000 km2. The area has not been previously explored with modern techniques. IGE considers the concession of high interest due to old reports and discoveries of kimberlite-like structures during aerial surveys carried out within the concession area. The concession is currently considered to have geology highly prospective for diamonds. IGE has acquired licenses for both kimberlite and alluvial deposits.
During the Diamang preliminary exploration of the "Luanguinga Licence area" in 1953 and 1975 (pits size of 2x2) one diamond of 0.44 carats, two diamonds of 0.21 carats and three diamonds weighting 1.12 carats were recovered on Lungue-Bungo River terraces. All of the diamonds were of gem quality. This gives great confidence that primary deposits should be diamondiferous. When combined with systematic and recorded samplings done before 1975 on the ground, the probability of having diamantiferous kimberlites would appear to be relatively high.
Aerial geophysical surveys carried out by GTK (Geological Survey of Finland) completed on August 5, 2007 have confirmed the existence of very large sized kimberlite fields with nine possible geological kimberlite structures larger than 7 hectares of which one is larger than 50 hectares.
The results from the aerial survey confirmed the Condiama reports of the early 1970's where it was noted that the Luanguinga area is highly potential for hosting kimberlites.
According to systematic and recorded samplings done before 1975 on the ground, the Luanguinga area appears to have a high probability of having diamondiferous kimberlites. Attractive and favourable anomalies are identified at a depth range that varies from 80 to 150 metres.
IGE has a 35% share in the alluvial part of the project and a 43% share in the kimberlite part of the project, with Endiama as the other major partner.
IGE's target at Luanguinga is to determine the existence of kimberlitic diamonds and to evaluate the economic potential to produce kimberlitic diamonds, initially from an open pit.
IGE is preparing for follow up of the aerial surveys made during the fall of 2007. Initially, a reconnaissance visit will be carried out at the most promising targets within the area which will form the basis for prioritization of the targets.
The Cariango concession area was acquired by IGE in late 2007. It is located in the Cuanza Sul region in mid-western Angola. Previous reports of Cariango's geology considers the area to hold gravel beds for diamonds as well as a high probability of hosting kimberlite source rocks. Artisanal mining workings are abundant in the area, which gives great confidence about Cariango's potential. This is a concession of high priority for further diamond exploration.
Between 1968 and 1970, Diamang found diamonds and kimberlite indicator minerals in the gravel beds of the Longa River draining the concession area from the south towards northwest. A number of kimberlites were also recorded in the area close to the eastern part of the license area, owned by Catoca. One kimberlite is registered and located closely within the eastern borderline of Cariango concession.
IGE's interest in the project is 40% of the alluvial part and 43% of the kimberlitic part of the project.
The concession is of high priority for further diamond exploration. An aerial geophysical survey is planned for initiating geological investigations towards the summer of 2008.
Compared to other African countries, Kenya has enjoyed relative political stability since its independence in 1963. After independence, Kenya promoted rapid economic growth through public investment, encouraging small agricultural production and incentives for private (often foreign) industrial investment. GDP grew at an annual average of 6.6 percent from 1963 to 1973.
Between 1974 and 1990,
however, Kenya's economic performance declined. Inappropriate agricultural policies, inadequate credit, and poor international terms of trade contributed to the decline in agriculture. Kenya's inward-looking policy of import substitution and rising oil prices made Kenya's manufacturing sector uncompetitive. Th e government began a massive intrusion in the private sector. Lack of export incentives, tight import controls, and foreign exchange controls made the domestic environment for investment even less attractive.
In 1993, the Government of Kenya began a major programme of economic reform and liberalization. As part of this programme, the government eliminated price controls and import licensing, removed foreign exchange controls, privatized a range of publicly owned companies, reduced the number of civil servants, and introduced conservative fi scal and monetary policies.
Th e development of the mining industry has been included in the government's poverty reduction plan, and in order to facilitate investment in the mining sector, the government is putting in place a new, more modern, mining legislation.
Despite the fact that Kenya was the largest kyanite producer in the 1950's, and still is among the largest producers of soda ash, the country has currently a very scantily developed mining industry. Th is is due to the fact that Kenya has been generally under-explored, in spite of its signifi cant potential which was recently demonstrated with the discovery of large titanium resources in the coastal area.
IGE's presence in Kenya is run through its 100% owned subsidiary Subimi Ltd ("IGE Kenya"). Subimi's portfolio totals 860 km2 and includes four Special Licenses split in seven areas, all of which are highly prospective for gold. Th ese license areas are located in the Greenstone Belts of southwest Kenya, and in northwest Kenya's Mozambique Belt terrains. Th e Company is well established with a head offi ce in Lavington, Nairobi and several fi eld camps on the licenses. Th e company employs a permanent staff of 23, including 7 geoscientists.
IGE has so far achieved signifi cant results. In South Western Kenya, geophysical and geochemical exploration has identifi ed a number of anomalies that will be drilled during 2008. Th e Kilimapesa project is in its early stages and development of the fi rst target quartz-vein is scheduled to start in March 2008.
IGE's presence in both Kenya and Burundi is largely driven by a careful identifi cation of the unique opportunities off ered by these two countries. It is strengthened by a multinational team, all members of which have a strong mineral exploration and development experience in Africa. Furthermore, IGE has developed strong ties with the local surroundings, e.g. with the Maasai community that lives at the Kilimapesa gold project site. Th is integration of IGE's activities in the local social and business environment, as well as IGE's technical competence, are some of the major strengths of IGE in Kenya.
At Kilimapesa in the Lolgorien region of south-west Kenya, IGE is running an advanced gold project together with AIM-listed Goldplat Plc. in a joint venture since July 2007. Th e joint venture is registered in Kenya as Kilimapesa Gold (Pty) Ltd. IGE's interest in the project is 50 percent.
Th e Kilimapesa project is located within the Migori Archaean Greenstone Belt, a northern continuation of the Lake Victoria goldfi elds, which hosts several major gold deposits. Th is includes Barrick's multi-million ounce North Mara mine and lies about 40 km to the southwest of the Kilimapesa project area.
Th e area has a long history of gold mining and artisanal mining is still active in the region. According to offi cial reports, the area produced a rough one million ounces of gold between 1920 and 1950.
Th e project has adopted a phased approach for the development of the highly prospective license area. Th e initial phase involved an evaluation of the ten selected targets within the area including samplings, undertaking IP programmes and shallow auger drilling of historic tailings. Th is phase was completed on budget and three weeks ahead of schedule in late 2007.
Kilimapesa Gold's target is to develop gold production from the high-quartz veins running through the area. Th e company plans to start production of gold during mid 2008.
A six-month underground development program of the Kilimapesa ore body started in January 2008. A stretch of 42 m at 10.13 gram gold per tonne was identifi ed as well as two parallel auriferous veins, located approximately 60 m apart and that can be traced over a strike length of 600 m. Several
auriferous quartz veins were traced along the surface for up to 1.2 km as marked by artisanal workings.
At Alpha Ray and Red Ray, Induced Polarisation ("IP", measures the charge separation or "chargeability" in porous, water-saturated, mineralised rocks caused by the passage of a low-frequency alternating current) surveys identifi ed a geophysical anomaly of 2 km in length striking east-west. A drill programme is planned to test these quartz veins, which currently is being worked by artisan miners at surface level.
Tailings derived from historical operations in the area have been sampled with auger drilling defi ning a JORC ( Joint Ore Reserves Committee) compliant mineral resource of 51,648 t at 2.52 g/t gold. Preliminary metallurgical examination performed by SGS Laboratories of Johannesburg indicated a recovery in excess of 90% for run of mine material.
Th e next step will be to refurbish the plant and to ramp-up its production capacity. Also planned are further exploration and development of additional ore bodies in the area.
IGE plant at camp in Lolgorien
During the 1920's gold was discovered in south west Kenya. This led to a rapid expansion of gold mines which operated until the 1950's when most of them shut down. Until then the area had produced about a million ounces of gold, which demonstrates the area's great potential for gold production.
In this region, IGE holds three licenses for gold exploration in highly prospective ground. The project areas are located within the immediate vicinity of other major gold and copper deposits. IGE's share of the project is 100%.
Historical targets in the Archaean Migori Greenstone Belt (Northern Lake Victoria Goldfield) have been the goldbearing quartz veins and veinlets, which are located along major regional shear zones and related fault splays. The veins generally contain minor sulphide bodies and the wall-rock is typically transformed to silica, pyrite and muscovite. These veins remain primary targets for IGE.
The southern part of the Lake Victoria Goldfield in Tanzania has shown that mineralization of this type can carry gold grades at over 70g/t without any accompanying visible quartz material.
The Migori Gold Belt occurs along the southern margin of the Nyanzian Greenstone Belt, extending WNW-ESE for a distance of approximately 90 km. The greenstone sequence within the Migori Gold Belt comprises a complex package of sedimentary rocks, mafic volcanics (pillow lavas and basalts), intrusive mafic rocks ("Older Dolerite"), and felsic rocks (porphyrite, felsite, quartz porphyry, granite). The later are mostly intercalated with sedimentary rocks, which suggest that they are pre- or syn-tectonic.
Another type of target in the Migori Belt is ironstonehosted gold. In such deposits gold occurs in cross-cutting quartz veins and veinlets or as fine disseminations associated with pyrite, pyrrhotite and arsenopyrite hosted in iron formations and adjacent rocks. The deposits are typically best developed where faults intersect the Banded Ironstone Formation and are often associated with small feldspar porphyry bodies.
To identify targets for bulk-mineable gold deposits with resources in excess of one million ounces through an extensive exploration programme.
In Lolgorien, gradient IP surveys have delineated a 3.5 km
long trending belt of resistively and chargeability anomalies which hosted the colonial-era mines Lom 10, Vim, Rutha, Olodi, Fountain and Lone. This anomalous belt is open to both the east and west. Dipole-dipole sound examination is now in progress over selected areas to provide further data for drill target definition. The licence area was recently covered by a stream sediment and heavy mineral concentrate sampling programme from which analytical results are due in the first half of 2008.
The Akala license is currently the subject of a hand-auger regolith sampling programme. This auger sampling is now being extended to cover the western part of the license, overlain by transported superficial sediments that preclude the use of conventional soil sampling techniques. Apart from gold, this area is being evaluated for its base metal reserves. The massive copper/gold deposit of the Macaulder mine lies only a few kilometres east of the license area.
In the Atieli license saprolite and mechanical auger sampling identified geochemical anomalous gold ore bodies. These were followed up by IP surveys that defined an extensive anomaly which has been tested by five shallow drill holes. Unfortunately, these did not manage to present any significant gold concentration.
IGE has signed a contract with RC drilling services provider SMS AB warranting a 3,000 m per month drilling capacity over 2 years. RC drilling is scheduled to commence in the second quarter of 2008.
IGE is actively continuing the search for additional targets in the area.
At Sekerr, previous examinations have identified nickel grades at around 1%, approximating the resource to be 5 million tonnes. The area is also estimated to hold about 10,000 tonnes of chromite. However, these sites were never exploited due to low metal prices. Considering today's significant rise in metal prices since the time these studies were made, the economical viability of production at these sites is more favourable.
The Sekerr project area is located within the Mozambique Belt. The southern part of this belt is formed from highgrade crustal rocks that host gemstone deposits in Mozambique, Tanzania and southern Kenya.
The Turkana area has seen considerable artisan gold mining activities in recent years. The region has the same geology as the still poorly understood iron-oxide-copper-gold systems of the world-famous Olympic Dam in Australia. The high level of exploration activity in the neighbouring regions of Ethiopia is a direct result of this.
The licenses have recently been acquired by IGE and further exploration is needed to assess the true potential of these areas. IGE owns 100% of the project.
To identify targets for gold deposits viable to mine, primarily through bulk sampling, with resources in excess of one million ounces. At Sekerr, IGE aims to assess the potential of the license area for nickel deposits.
The Sekerr license was subject to a stream sediment and heavy mineral concentrate sampling programme during the fourth quarter of 2007. About half of this rugged and mountainous terrain has been covered so far. A scoping study for the economic viability and possible exploitation of the nickel deposits is also underway. At Turkana discussions with a contractor for a Short Wavelength Infrared (SWIR) study have been initiated.
At Sekerr, the exploration programme is aimed at identifying gold occurrences within the license area and assessing the possible economic interest of known nickel mineralization. An initial stream sampling survey and reconnaissance core drilling on gold mineralization was recently started.
At Turkana, remote sensing has been the main tool for locating alteration zones of gold mineralization. This will be followed by geophysical and geochemical examination prior to drilling.
Burundi has, similar to Angola, for a long time been involved in a major civil war. Even though the country is rich in natural resources, the political situation up until 2005 has not permitted any large-scale or industrial extraction. Mineral resources found are gold, nickel, vanadium and copper.
Th rough focused eff orts, IGE has managed to establish important relations with the government of Burundi, and has thereby – after applications and negotiations – managed to acquire exploration licenses for one gold deposit and one vanadium deposit, respectively. Negotiations for additional licenses are in progress, and IGE has an option to acquire a 51 percent interest in a rich colombo-tantalite deposit.
Th e government of Burundi is fi rmly determined to distance itself from the war-ravaged and politically unstable history of the country and considers Sweden being a good partner, not only for business relations but as a source of guidance for building a functioning society. IGE has become an important factor in building this relationship.
IGE was among the fi rst foreign exploration companies to show interest in Burundi and to be granted exploration permits after the civil war. IGE's presence Burundi is run through its 90% subsidiary IGE Burundi SA. Th is company has developed excellent relations with the government and enjoys a reputation of being a serious and honest partner.
IGE holds highly prospective ground for gold (Butara) and vanadium (Mukanda), and the two Special Exploration Permits totals an area of 478 km2.Th e company also has an option to acquire a 51% interest in a very promising colombo-tantalite mining project (Kabarore).
Th e company has its offi ce and a guest house in the capital of Bujumbura, and several fi eld camps on the project sites. Th e company employs a permanent staff of 20, including 6 geoscientists.
IGE's vanadium license in the Mukanda area has previously been subject to extensive geological studies by the Norwegian company Elkem Engineering AS, which in 1984 carried out a pre-feasibility study that indicated a rich mineralized deposit. According to this pre-feasibility study the deposit has a proven mineral reserve of approximately 63,000 tonnes of pure vanadium. Th is corresponds to 107,000 tonnes of pure V2O5 (vanadium pentoxide). Th e area has since then been explored through trenching and drilling (47 holes down to a depth of 200 metres totalling 5,746 metres).
In 2007, IGE initiated an independent pre-feasibility study including supplemental drilling, test mining, leaching studies and analysis of infrastructure. Th e goal is to arrive at a decision regarding investment in mining within two years.
Th e gold exploration agreement applies to deposits in Mabayi-Butara, an area located in the north-western part of the country, around 75 km north of the capital Bujumbura. Th e area is a classic gold area, with extensive local small-scale gold miners. Between 1933 and 1962, 5,310 kg gold was produced in the area. Exploration with modern technology was initiated in 1971, and has been under governmental control since 1988. IGE's aim is to discover mineral deposits and to complete a pre-feasibility study within two years. Th ere is extensive information available, which will considerably shorten and facilitate this process.
A Swedish delegation meets with Burundi government offi cials in February in Bujumbura on initiative of IGE
IGE's head offi ce in Bujumbura
At Mukanda, 15 km east of Burundi's second largest city of Gitega in central Burundi, IGE Burundi SA holds an exploration permit of 88 km2. Th e deposit was initially discovered during the 1960's, but remained unexplored until 1972 when metallurgical testing of 100 kg was carried out by the Finnish company Rautariikki OY. In May 1984, a pre-feasibility study of 3 tonnes was completed by the Norwegian company ELKEM A/S. Th e pre-feasibility study concluded that the deposit had an economically viable annual production potential of 3,500 tonnes of FeV and 51,500 tonnes of steel.
Th e deposit is a Bushweld-type titanium-magnetite, magnetite and ilmenite body. Magnetite is the main vanadiumbearing mineral which contains over 10 percent vanadium. Approximately 25% of the resource consists of oxidized ore (ilmenite) with a 0.8% grade of vanadium. Th e remainder consists of disseminated and massive ore. Th e ore body is continuous over a strike length of over 1 km, dips at about 50° to the South and is mainly hosted in weathered anorthosites. Th e ore vanadium grade ranges between 0.2 and 3%. Th e average vanadium grade of 0.64% compares favourably to other world-class deposits.
IGE Burundi SA owns 100% of the Mukanda project.
One of IGE's two primary targets at Mukanda is to increase the deposit resource from 110,371 tonnes of contained vanadium to at least 200,000 tonnes. Th e second one is to evaluate the economic potential to produce an annual 10,000 tonnes of vanadium pentoxide or ferrovanadium and steel, initially from an open pit for a minimum mine life of 20 years.
Initial evaluation of previous exploration and assessment work is almost complete. Further exploration work (trenching, magnetometer survey, stream sampling) aimed at increasing the deposit's resource is at an advanced stage with very encouraging results. Several anomalies have been identifi ed close to the project area, and initial trenching shows that they are linked to new magnetite mineralization bodies. Next step will be drilling of the identifi ed anomalies.
IGE has initiated discussions with an independent consulting fi rm to conduct a review and an update of the existing pre-feasibility study. Th is includes a re-sampling programme for the existing trenches and confi rming of NI 43-101 compliant resources.
At the Butara project area, located about 80 km north of Burundi's capital city Bujumbura, IGE Burundi SA holds an exploration permit of 390 km2. Th e area is underlain by Kibaran meta-sediments and granites. Artisan alluvial gold mining is extensive which demonstrates the high potential of the area. Gold-bearing iron-fi lled breccias have previously been identifi ed immediately north of the permit. Th e host formations extend southwards into the Butara permit.
Several types of targets can be considered in the rich Butara area. Th ere are Pan African breccias, shear zones and quartz veins, iron-gold/copper-uranium deposits and paleo-alluvial deposits. Iron oxide-copper-gold deposits are typically related to fractionated granite suites and are associated with structures active at the time of granite emplacement. Th e host rock is typically quartzo-feldspathic. Th e deposits are characterised by pre-mineralization potassic alteration followed by a hydrolytic alteration event. Th ese deposits are typically known from the Proterozoic period, fi rst recognized in Australia. Other sites having this kind of geology are the world-famous Olympic Dam and Ernest-Henry deposits.
In a Central African context these deposits are presently known to occur within the Proterozoic (Kibaran) Lufilian Arc, which hosts the major copper belts of Zambia and the DRC. In this region, these deposits occur as vertical, structurally-controlled, haematite-rich breccia zones up to several kilometres in length. The Kibaran system extends into Burundi where its lithologies include quartzites, greywackes and granites, hosting uranium-bearing pegmatites. These latter bodies are evidence of the presence of late-stage pneumatolytic fluids responsible for hydrolytic alteration.
The Butara exploration project is 100% owned by IGE Burundi.
The target of the projects is to identify one or several bulk-mineable gold targets of one million ounces or over, respectively.
A satellite imagery study of the area has been completed. The results will be integrated with a currently ongoing ground testing programme involving sediment and saprolite sampling. Following this will be an aerial geophysical survey which will give a detailed definition of targets in the area before entering into the last phase of reconnaissance drilling.
Kabarore is located 150 km north of Bujumbura, the capital of Burundi. The deposit was discovered in the 1980's by the Burundese company Comebu SA, which was granted mining licenses. The mine was only operated on a small scale, and came to a permanent stop during the Burundi crisis
when Comebu was damaged. Currently, the mine is producing on an artisanal scale. IGE Burundi SA has entered in an option agreement to acquire 50% of the mining concession and start large-scale industrial mining of the deposit.
The deposit consists of colombo-tantalite and cassiteritebearing pegmatites hosted in low grade meta-sediments. The pegmatite and its host rock are sufficiently weathered to allow mining without the use of explosives, and processing without milling. This will result in a huge cost reduction. Individual pegmatite bodies are between 10 and 30 metres thick and closely spaced in clusters, thus allowing open-pit mining of several mines at the same time. The recovery rate of the ore is expected to be very high.
IGE has an option to acquire 51% of the concession from Comebu SA.
To evaluate the economic feasibility to produce 250,000 lbs per year of contained Ta2O3 in the form of colombo-tantalite concentrate in the Kayanza province, Northern Burundi. If the results of the economic feasibility are positive, IGE aims to start production in 2008.
A pre-feasibility study will be carried out by IGE Burundi SA prior to the decision to exercise option and to commence mining. A pre-feasibility study including the following is in progress: estimation of resources, preliminary geotechnical study, mine design and planning, metallurgical testing, plant design and costing, preliminary environment and social study.
Sweden and Norway have a long tradition of mining and metal industry. Exploring for new deposits and mining has had an important infl uence on the development and economic growth of the region. In the early 1900's about 500 mines were active in the areas around Bergslagen, Skelleftefältet and Norrbotten. Even though the number of mines has steeply decreased, the
importance of this industry for the Scandinavian economy remains. Sweden is the leading producer of iron in Europe and is one of the top producers of copper, gold, zinc and silver. Th is combined with favourable legislation concerning exploration and the infrastructural within the country, results in that IGE consider the region to be of high interest for exploration and mining activities.
IGE Nordic is an exploration company operating in Sweden and Norway. Th e company has a large and well-diversifi ed exploration portfolio in combination with an experienced team of geologists and fi eld technicians with core competences and expertise in evaluating opportunities in the geological conditions, specifi c to Sweden and Norway.
IGE Nordic's main business activity is exploration of mineral resources in the Nordic region, with the aim of starting mining operations for the extraction of these minerals in the medium to long term. For 2008 IGE Nordic has been prioritizing activities and resources on the most advanced projects with the best resource potential and the highest probability of being successfully brought into profi table mine production. On the basis of currently available information, IGE Nordic focuses on advancing Rönnbäcken (nickel) and Bidjovagge (gold) to the next stage. Th e objective of each
proposed work programme is to establish through drilling and metallurgical test work a mineral resource of suffi cient size and grade to support a viable mining operation and warrant further exploration and development work. In order not to leave other projects unattended, plans will be prepared in parallel to carry out further exploration work on less advanced projects such as Mjölkfj ället (nickel) and Solvik (gold).
By the end of 2007, IGE has got about 80 exploration permits in the Nordic region which is distributed within the diff erent phases of the prospecting process. Th e company's strategy has involved an extensive work in searching for potential deposits followed by an active application process of explorations permits. Th e demand for concessions in the Nordic area has signifi cantly increased because of the higher prices of metals. Th e exploration permits which, due to diff erent circumstances, are not considered to be workable is terminated as soon as the geologist's has got enough documented information to base a termination decision on.
Below follows a summarized description of prioritized projects of IGE Nordic. For a more adequate report of the diff erent projects and the fi nancials of IGE Nordic, please see IGE Nordic's Annual report for 2007. Th e report is available on the company's website www.igenordic.se or at the IGE headquarters (see contact information at the end of this annual report).
Location of IGE Nordics exploration projects
Rönnbäcken is situated in the mountains in northern Sweden, about 25 km to the south of the village Tärnaby, Västerbotten County.
| Location: | Tärnaby, Västerbotten county |
|---|---|
| Status: | Exploration License (in Swedish: Under |
| sökningstillstånd) | |
| Ownership: | 100% IGE Nordic |
| Commodity: | Nickel, Cobalt, Gold and Platinum |
| Group Metals |
Rönnbäcken is a high potential open pit nickel sulphide project situated about 25 km south of Tärnaby, Västerbotten County in northern Sweden. Th e exploration licenses are owned 100% by IGE Nordic. In November 2007, IGE Nordic reported positive results from new bench scale benefi ciation tests, which confi rmed the possibility of producing a very high grade nickel concentrate (26% Ni),. Th e same press release reported results of a conceptual study for a mine and mill operation.
Previous work identifi ed extensive nickel mineralization at Rönnbäcken. Although the rock contains a low grade of nickel, the sulphides in this rock contain an unusually high nickel content, making it possible to produce a high grade
concentrate. Test mining (4,000 tonnes) and large scale pilot tests by Boliden in the 1970's produced an exceptionally high grade nickel concentrates of 25-35% Ni with by product cobalt, gold, silver and platinum group metals. Recent bench scale benefi ciation tests at Minpro, Sweden achieved similar results - a concentrate of 26% nickel, which is the highest nickel concentrate in the world. Conceptual economic studies suggest a target deposit of 130-170 million tonnes of ore at a grade of 0.20-0.35% nickel (of which about half is expected to be recoverable in the form of sulphide nickel) would potentially be viable using conventional and proven technology. No mineral resource can be estimated with currently available data. However, the known mineralization would be amenable to open pit mining with a low stripping ratio and previous studies indicate a large tonnage potential. Th erefore, an extensive, phased drill program is planned to commence in early 2008 to establish a mineral resource, followed by a scoping study and pilot tests.
Nickel-rich sulphide minerals were discovered in some of the serpentinites in the Caledonides in the 1950's. In the 1970's Professor PG. Kilstedt did metallurgical research on extracting nickel from these rocks at the Technical University of Stockholm. Between 1974 and 1976, the Boliden Mining Company ("Boliden") carried out sampling, minor drilling and in 1980 obtained a Mining License for two areas at Rönnbäcken. Test mining of 4,000 tonnes was carried out in an open pit followed by metallurgical tests. After about 20 years, Boliden dropped the Mining Lease. In 2006, IGE claimed the area at Rönnbäcken.
Th e proportion of nickel in sulphides in the serpentinites at Rönnbäcken is quite high compared to other serpentinites in Sweden. Th e total grades are 0.20 – 0.35% Ni with the recoverable nickel occurring as sulphides being 0.10 – 0.17%. Sulphide nickel occurs as cobalt-bearing pentlandite, an ironnickel sulphide and the most important sulphide nickel ore worldwide and as heazlewoodite, Ni3S2, a rare nickel-rich mineral found in serpentinite. Although the nickel content is low compared to existing nickel mines around the world, metallurgical tests carried out in the past were successful in producing a nickel-rich sulphide concentrate with much higher grade (25-35% nickel) than typical concentrates. Potentially important byproducts reported in the test concentrate included levels of up to 1.8% cobalt, 20-30g/t silver, 4-5g/t gold, a total of 2.2-2.4g/t platinum group metals (platinum, palladium and rhodium).
A rough estimate made by Boliden in 1980, mainly from the surface sampling of outcrops and a few diamond drill holes suggested a wide area of the nickel mineralization, which
down to a realistic depth for open pit mining could host a very large tonnage.
The deposit is situated in an area without any specific natural or cultural values identified. The area includes land that has been defined as of national interest for the purpose of reindeer herding. To develop a project in this area will require consultations with the concerned Sámi village to establish possible conditions for mining and reindeer herding to operate in co-existence. The entire area is part of a vast area defined as national interest for recreational purposes. This is unlikely to be an obstacle when it comes to environmental permitting.
If an application for an exploitation concession is made after a successful exploration phase, land use aspects would be assessed. In an application for an environmental permit, according to the Environmental Code, which the Company may file at a later stage, the conditions for design, building, operation and closure of a project will be described. One advantage, specifically for post mining environmental protection, is that no significant amount of acid mine drainage is likely to be expected because of the predominantly basic rock nature and the low content of iron sulphides. However detailed testing will be required.
The Bidjovagge Goldfield is situated along the western part of the Finnmark plain, 40 kilometers by road to the north of the Kautokeino municipal centre. From Kautokeino, there is an all weather road to Alta, which has daily flight connections.
| Location: | Kautokeino, Finnmark, Norway |
|---|---|
| Status: | Exploration License (in Norwegian: |
| Muting) | |
| Ownership: | IGE Nordic 90% and Geologiske Tjenes |
| ter a.s. 10% | |
| Commodity: | Gold and Copper |
In October, 2007, IGE Nordic announced a new discovery of gold and copper mineralization at the Bidjovagge mine property in northern Norway from a 2,747m core drilling program. The Bidjovagge Goldfield is situated in Finnmark, 40 kilometers north of Kautokeino in Norway. From Kautokeino, there is an all weather road to Alta, which has daily flight connections to the rest of the country.
Previous mining produced over two million tonnes of copper-gold ore and was the largest historical gold producer in Norway. The remaining historically estimated mineral resources (neither NI 43-101 nor JORC compliant) are 1.16 million tonnes grading 1.09% copper and 3.72 g/t gold, which correspond to nearly 140,000 oz of gold.
The new discovery is located about 350m north of the northernmost open pits of the old mining area. The intersection, 27m with 5.59 g/t gold and 1.54% copper, was found at about 260m below surface and indicates that the prospective mineralized structure continues towards the north. This section includes 8m at 10.81 g/t gold and 2.35% copper. Hole B06-7, collared 200m south and 93m east of B07-4, intersected 0.64g/t gold and 0.94% copper over 16m. Only one hole has been completed since B07-4 and it deviated from the target, which remains open to the north and to depth. Some of the other known mineralized zones and mined orebodies have not been explored to depth. The recent drilling results are very encouraging and drilling is planned to continue in 2008.
In the last decade geologists recognized the style of mineralization and alteration at Bidjovagge as belonging to the Iron-Oxide Copper Gold Deposit type, which includes significant deposits worldwide. Elsewhere in the district, areas of geochemical copper anomalies, combined magnetic/ electromagnetic anomalies and copper-gold mineralization, similar to Bidjovagge have been claimed by IGE Nordic and will also be explored. Most of the area is covered by thick glacial deposits, bogs, heather and scrub so mineralization could have been missed by previous prospecting.
This gold and copper mineralized area is part of the Paleoproterozoic Kautokeino Greenstone Belt, which has its western border close to Bidjovagge and extends 70 km to the southeast where it crosses the Finnish border. The width here is around 40 km, widening towards the north. Just north of Bidjovagge, the Belt is overlain by Cambrian shale forming a thrust plane for the overlaying Caledonian quartzite.
The actual Kautokeino Greenstone Belt comprises a synclinorium of volcano-sedimentary rocks bordering Archaean basement gneisses both to the east and the west. The gold-copper deposits occur in albitized black schist and are composed of chalcopyrite, pyrite and minor pyrrhotite. Accessory minerals are magnetite, hematite, various tellurides and davidite. Gangue minerals are calcite, dolomite/ankerite, albite and quartz.
Copper mineralized samples at Bidjovagge were first found by a local reindeer herder, and the first claims were staked by Boliden in 1952. Thereafter, during the late 1950's a Government controlled company, Kautokeino Kopperfelter A/S was formed and became responsible for the exploration until the deposit was brought into production by A/S Sydvaranger in 1970. Copper ore grading 1.8% copper and approximately 1g/t gold was mined from four open pits. In 1974 (after producing 388,000 tonnes of ore), the mine was closed due to milling problems and low metal prices.
In 1983, Outokumpu OY optioned the mine, and after extensive exploration concentrating on the gold potential, reopened it in 1985. The probable and proven ore reserves of 750,000 tonnes grading 1.1% copper and 1.96 g/t gold were regarded as sufficient for three years production from three open pits. When the mine closed again in 1991, it had produced 1.9 million tonnes grading 1.3% copper and 4.0 g/t gold achieved mainly from 10 open pits.
In the last decade, geologists have recognized the style of mineralization and alteration at Bidjovagge as belonging to the Iron-Oxide Copper Gold Deposit type, which includes significant deposits worldwide.
The deposit is situated on land leased by Finnmarkseiendommen AS (The Finnmark Property Ltd.), and used for reindeer herding. The Finnmarksloven (The Finnmark Law) gives reindeer herding interests a strong say in decisions regarding land use. If mineralization of sufficient size and grade is found that would support a viable mining operation in the area, IGE Nordic would, in consultation with the Samis, develop a plan for exploitation, acceptable to the reindeer herding interests.
The deposit has been worked earlier and according to reports from environmental monitoring programs during mining and in the post-mining period, the environmental impact on the surrounding water courses has been very limited. This is probably due to the amount of basic minerals in the rock, inhibiting the formation of acid mine drainage. The area comprises tailings dams and open pits from previous operations, which may hold capacity for further land filling of tailings and waste rock. The existing waste disposal facilities are reportedly in good condition. This has yet to be verified by the Company.
It is of the utmost importance to the Board and management of IGE that the investors and other interested parties have a high level of confi dence for the corporate governance. Open communication, internal control and equal treatment of all shareholders are important parameters in the company's quest for confi dence. For this purpose IGE has formulated the following guidelines for its corporate governance.
IGE long-term objective is to become a leading exploration and mining company with respect for the environment and sustainable development.
In order to achieve its long-term objective, IGE's strategy is:
t5PQSJPSJUJ[FIJHIHSPXUIQSPKFDUTXJUIUIFIJHIFTUQSP bability of being successfully brought into profi table mine production within the shortest possible timeframe. t5PDPOTJEFSQPTTJCMFDPPQFSBUJPOXJUIUIFNBKPSJOUFS national mining companies at the relevant stage to secure necessary skills and capital to advance the project properly.
Th e following ethical guidelines shall be practiced in the Company, and apply for all employees of the Company:
Personal conduct: All employees and representatives of the Company shall behave with respect and integrity towards business relations and partners, customers and colleagues. Th e management of the Company has a particular responsibility to promote openness, loyalty and respect.
Confl ict of Interests: Th e Company's employees and representatives shall avoid situations wherein a confl ict between their own personal and/or fi nancial interests and the Company's interests may occur and, where such confl icts are unavoidable, shall inform senior management and/ or the board of such confl icts so that they can be properly managed.
Confi dential Information: Employees and representatives of the Company possessing confi dential information in relation to the Company, shall conduct themselves and safeguard such information with great care and loyalty, and comply with any and all signed confi dentiality statements and agreements.
Infl uence: Th e Company's employees and representatives shall neither directly nor indirectly off er, promise, request, demand or accept illegal or unjust gifts of money or any
other remuneration in order to achieve a benefi t.
Th e Board aims to maintain an equity ratio in the Company satisfactory in light of the company's goals, strategy and risk profi le.
It is an objective of the Company to generate returns to the shareholders in the form of dividends and capital appreciation, which is at least on the same level as other investment possibilities with comparable risk.
Th e Company has only one class of shares and there are no voting restrictions. In case of rights issues, all shareholders hold equal right to subscribe for shares.
5SBOTBDUJPOTXJUISFMBUFEQBSUJFTTIBMMCFBUBSNTMFOHUIBOE at fair value which, in the absence of any other pertinent factors shall be at market value. Th e Company's fi nancial statements shall provide further information about transactions with related parties.
Th ere are no limitations of trading and voting rights in the Company. Each share gives the right to one vote at the Company's Annual General Meeting of shareholders.
Th e Company summons the shareholders to an Annual General Meeting as soon as possible and no later than 4 weeks QSJPSUPUIFNFFUJOH5SBOTNJUUFEXJUIUIFTVNNPOTBSF documents in suffi cient detail for the shareholders to take a position on all the cases to be considered.
Th e cut-off for confi rmation of attendance is set as short as practically possible, and the Board will arrange matters so that the shareholders who are unable to attend in person will be able to vote by proxy.
In appointing members to the Board, it is emphasised that the Board has the requisite competency to independently evaluate the cases presented by the Management a well as the Company's operations. It is also considered important that the Board can function well as a body of colleagues.
At least two of the Board members elected by shareholders are independent of the company's main shareholder(s).
At least half of the Board members elected by the shareholders are independent of the Company's day-to-day management and its main business relations. The following criteria are applied in order to ensure this:
tɩF#PBSENFNCFSTTIBMMPOMZSFDFJWFSFNVOFSBUJPOBOE board member fees in relation to the appointment as a board member or member of subcommittees.
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tɩF#PBSENFNCFSTTIBMMOPUCFFNQMPZFEJOUIF\$PNpany.
tɩF#PBSENFNCFSTTIBMMOPUCFDMPTFMZBTTPDJBUFEXJUI other board members or the CEO.
tɩF#PBSENFNCFSTTIBMMOPUIBWFDMPTFGBNJMZUJFTXJUI the CEO.
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OPSSFQSFTFOUTJHOJmcant commercial interests in the Company.
The Board shall prepare an annual plan for its work with special emphasis on goals, strategy and implementation.
The Board shall ensure that the Company has good management with clear internal distribution of responsibilities and duties.
The Board is responsible for ensuring that the Company is operated in accordance with the Company's values and ethical guidelines.
Remuneration to Board members shall be reasonable and based on the Board's responsibilities, work, time invested and the complexity of the enterprise. The compensation shall be a fixed annual amount. The Chairman of the Board can receive a higher compensation than the other Board members. Work in subcommittees will not be compensated in addition to the remuneration received for Board membership.
The Company's financial statements shall provide further information about the Board's compensation.
The Board decides the salary and other compensation of the CEO, having reference to market norms and performance of the individual.
The Company's financial statements provide further information about salary and other compensation to the CEO.
The Board of Directors and the Management of the Company assign considerable importance to giving the shareholders and the financial market in general timely, relevant and current information about the Company and its activities. All communication shall be carried out while maintaining sound commercial judgement in respect of any information which, if revealed to competitors, could adversely influence the value of the Company's assets and in accordance with the Stock Market Regulations and the information requirements outlined therein.
Sensitive information will be handled internally in a man-OFSUIBUNJOJNJ[FTUIFSJTLPGMFBLT"MMDPOUSBDUTUPXIJDI the Company becomes a party shall contain confidentiality clauses.
The Company has clear routines for who is allowed to speak on behalf of the company on different subjects, and who shall be responsible for submitting information to the Oslo Stock Exchange.
Each year the shareholders shall receive a financial calendar with dates of important events such as Annual General Meeting, publishing of financial reports throughout the year etc. Information to shareholders, investor relations and the market shall be available on the Company's web site.
The Company shall conduct open presentations of financial reports at least twice each year. Information to the shareholders is available in English.
The Board must be aware of matters of special importance to the shareholders. The Board must therefore ensure that the shareholders are given the opportunity to make known their points of view at and outside the shareholders' Annual General Meeting. Continuous publishing of information from the Company shall aid shareholders and other investors in arriving at well reasoned conclusions regarding purchase and sale of shares, and in this manner contribute to correct pricing of the shares. Significant value generators and risk factors will be described.
The Board shall not without specific reasons attempt to hinder or exacerbate anyone's attempt to submit a takeover bid for the Company's activities or shares.
In situations of takeover or restructuring, it is the Board's particular responsibility to ascertain that all shareholders' values and interests are protected.
Each year the auditor shall present to the Board a written confirmation that the auditor satisfies established requirements as independence and objectivity.
The auditor shall be present at Board meetings where the annual accounts are on the agenda if the Board considers it to be of use. Whenever necessary, the Board shall meet with the auditor to review his view on the Company's accounting principles, risk areas, internal control routines etc.
The Board has established as a guideline that the auditor may only be used as a financial advisor to the Company provided that such use of the auditor does not have the ability to affect or question the auditor's independence and objectiveness as auditor of the Company. Only the Company's CEO and/or CFO shall have the authority to enter into agreements in respect of such counselling assignments.
In an ordinary shareholders' Annual General Meeting the Board shall present a review of the auditor's compensation as paid for auditory work required by law and remuneration associated with other concrete assignments.
In connection with the auditor's presentation to the Board of his annual work plan, the Board should specifically consider if the auditor to a satisfactory degree also carries out a control function.
The Board shall arrange for the auditor to attend all Annual General Meetings.
Nature and its resources are very important factors for the people and the economy. A large part of the population in large parts of Africa is self-supporting, i.e. they are directly dependent on the vegetation and water in their immediate environment. Th erefore they are very vulnerable to the consequences of changes in the environment. Environmental laws will probably be evolving and strengthened in the countries where IGE is active, as workable structures of society are put in place.
IGE considers the Swedish environmental laws to be relatively advanced and place strict requirements regarding businesses' work with environmental questions and the impact of their operations on the environment. IGE has decided to follow the Swedish environmental protection rules whenever legislation may be missing in those countries where the company is active. IGE's activities are carried out in close contact with the African authorities, who have access to a clear view of the company's methods. Th is provides good opportunities for joint work on the environment, where IGE is continually updated on any changes in the legislation. .
As the attitude of authorities, companies and investors has changed signifi cantly regarding environmentally friendly activities, a defi nite interest in ethical investment has arisen among investors and analysts. Many of the world's largest asset management fi rms have chosen to follow the UN's regulations for ethical investments,"Principles for Responsible Investments" (PRI). As they evaluate their investment in companies they also analyze how those companies handle issues of human rights, health and work environment, social responsibility and the environment etc. As IGE depends on the capital market this becomes an increasingly important matter to consider and to formulate methods of handling.
IGE's business concept is based on the idea that the activity shall have the least possible negative impact on the environment. Company policy is to eff ectively and in an environmental-friendly way utilize energy, land and material within all of its zones of activity. Th e main environmental impact from IGE's activities is usage of land, energy consumption and waste handling.
Th e Company's exploration work in Sweden is conducted in compliance with laws and regulations, which have been passed by Länsstyrelsens Miljövårdsenhet ("County Environmental Protection Agency"), SveMin and others. In addition, IGE strives to conduct the work in a form that is friendly to the environment. Th e Company's activity is founded on a dependency of, and interaction with, nature.
A permit usually requires that the exploration work is done in such a way that damage to nature, plant and animal life is avoided as much as possible. Along with the exploration permit, a specifi cation is also issued for how vehicles, drill rigs etc. are to be transported within, to and from the work area.
Th is means that the entrepreneur has to use approved hydraulic oils, that rinse water must be removed from previous drill holes or waterways and that the drilling sludge is collected and deposited in solid moraine. IGE avoids using track vehicles in wetlands and outcropping rock and also during the mating seasons of various animals. Drill sites are continuously cleaned, and thus the environment should not be aff ected at all, except for, in rare cases, the need to cut down some trees.
SveMin is the main organization handling both work related and employment-political related matters in the Swedish mining mineral and metal industry. SveMin's ethical guidelines for exploration work, among other things, require that IGE in all possible ways investigates if the area is protected and if so, obtains a permit for the work, and that the Company cooperates with the land owners during the progress of the work.
All drilling contractors working for IGE comply with SveMin's checklist for environmentally safe machinery and work place. Th e checklist includes, for instance, daily inspections to ensure there are no leaks or possibilities for leaks in oil and chemicals containers, and that a suffi cient quantity of oil-absorbing material is available.
IGE's commitment to CSR is based on a number of principles, including the upholding of high ethical standards; good corporate governance; to work safely and responsibly; to minimizing our environmental footprint; to facilitating the free and open sharing of opinions, skills and knowledge; and to deliver benefi ts to our stakeholders and to the society at large.
Th is commitment has been part of the company ethos from the outset, and a variety of initiatives have been undertaken that illustrate our approach. As the company is active in both the Nordic countries and in Sub Saharan Africa, our CSR related work has become quite varied, in response to the prioritized needs identifi ed in the countries and/or areas where we are working.
In the Nordic countries, IGE operates in societies with advanced and enforced legislation within the Environment, Health and Safety area, and with long traditions of multi stakeholder participation in dealing with environmental issues. Th e Company is able to build its operations from this platform while, at the same time, seeking improvements in the management of CSR related issues whenever feasible. Th e issues that have attracted most attention thus far are those related to socio-economic and cultural issues in areas where reindeer husbandry is taking place, and to the reporting on exploration results. Th us, the company is participating in ongoing discussions with stakeholders, including Saami reindeer herders, on possibilities to utilize the Environmental Impact Assessment process to better address socio-economic and cultural considerations related to mining projects. Moreover, as the reporting of mineral resources and ore reserves in the Nordic countries has not yet reached the same high level of accountability as in some other advances mining nations (e.g. Canada, Australia, South Africa). Th is initiative is providing a strong guarantee for investor confi dence.
In Africa, the company is active in Kenya, Angola and Burundi. In these countries, most of our CSR related work has focused on issues related to ensuring safe working practices; to addressing the aspirations of informal and/or artisanal miners; and to providing overall community assistance and development. Th us, in Angola we have developed guidelines which will safeguard the health and safety of our staff , workers and neighbours at our diamond mine at Luxinge. In Burundi, IGE is assisting communities by improving road infrastructure in our project areas; by providing assistance for the regeneration of agriculture in areas that were hit hard during the Civil War, and in a more philanthropic venture, IGE is assisting in the construction of a stadium in the town of Ngozi. In the Kenyan project (Lolgorien), IGE has provided building materials and logistical help to local schools.
Further, IGE has signed an agreement with local artisan miners to purchase their high-grade tailings, and thus allowing them to generate additional income from their activities. IGE has further, together with the Kenya Chamber of Mines, participated in the development of projects to assist artisanal miners with safety and health education.
Work is currently underway which will ensure that the commitment and activities described above be made part of a formal IGE-CSR strategy, including an overall Code of Conduct as well as specifi c guidelines for the various operations within the group. Th e subsequent implementation, continuous improvement and follow-up of this work will form a prioritized company activity in the years to come.
Th e shares are listed on the Oslo Stock Exchange SMB list (OSE) since 1997 and on the Nordic Growth Markets (NGM) since 2005. Th e shares are traded under the ticker symbol "IGE". One lot of shares corresponds to 2,000 shares on the OSE and 1,000 shares on the NGM.
Th ere are 341,000,000 registered shares in the company. Th e Company has one type of shares. Th e IGE shares are registered at the Securities Register Centre (VPS in Norway and VPC in Sweden) with the ISIN-code SE0000378119.
| 2007 | 2006 | 2005 | 2004 | 2003 | ||
|---|---|---|---|---|---|---|
| Number of outstanding shares at begin | Number | 341 000 000 | 311 000 000 | 198 200 000 | 193 200 000 | 193 200 000 |
| ning of reporting period | ||||||
| New share issue | Number | - | 30 000 000 | 112 800 000 | 5 000 000 | - |
| Number of outstanding shares at the end | ||||||
| of reporting period | Number | 341 000 000 | 341 000 000 | 311 000 000 | 198 200 000 | 193 200 000 |
| Average number of shares | Number | 341 000 000 | 313 000 000 | 266 692 778 | 196 366 667 | 193 200 000 |
| Operating profi t | TSEK | -66 023 | -29 393 | -16 724 | 6 532 | 26 940 |
| Profi t after tax | TSEK | -62 529 | -36 404 | -23 207 | 6 253 | 28 445 |
| Operating profi t per share | SEK | -0,194 | -0,094 | -0,063 | 0,033 | 0,134 |
| Profi t after fi nancial items per share | SEK | -0,183 | -0,116 | -0,087 | 0,032 | 0,141 |
| Profi t per share after tax | SEK | -0,183 | -0,116 | -0,087 | 0,032 | 0,141 |
| Shareholders equity per share before | SEK | 0,718 | 0,640 | 0,393 | 0,392 | 0,345 |
| dilution | ||||||
| Dividend | TSEK | - | - | 25 308 | - | - |
| Price per share at the end of reporting | SEK | 2,34 | 5,05 | 2,17 | 0,4 | 0,43 |
| period | ||||||
Th e equity is 17,05 MSEK, and is composed of 341,000,000 shares. Every investor entitled to vote in the company's meetings for the complete quantity of shares without any
limit in voting rights. Every share has the same right to the company's profi ts and assets.
Below are the 20 largest shareholders in IGE according to the VPS-register in Norway and VPC-register in Sweden
as per year-end 2007. Please note that this list also consists of nominee shareholders that hold shares on behalf of other shareholders.
| Holdings (number of | |||
|---|---|---|---|
| Name | Country | shares) | Holdings % |
| Skandinaviska Enskilda Banken | Sweden | 14 909 158 | 4,37% |
| Ulrik Jansson (inc controlled companies) | Sweden | 14 865 500 | 4,36% |
| SIS Segaintersettle AG 25PCT | Switzerland | 10 576 889 | 3,10% |
| Nordnet Securities Bank AB | Sweden | 8 333 699 | 2,44% |
| Arctic Securities ASA | Norway | 7 000 000 | 2,05% |
| SIS Segaintersettle AG/ZüRICH, W8IMY | Switzerland | 5 441 000 | 1,60% |
| Holen Gunnar | Norway | 4 300 000 | 1,26% |
| AG Invest AS | Norway | 4 000 000 | 1,17% |
| Danske Bank A/S | Denmark | 3 921 098 | 1,15% |
| Silvercoin Industries AS | Norway | 3 879 000 | 1,14% |
| Stromland Sivert Nötsund | Norway | 3 643 000 | 1,07% |
| JAG Invest AS | Norway | 3 500 000 | 1,03% |
| Sydbank | Denmark | 3 356 110 | 0,98% |
| Cacfeis Bank | France | 2 847 270 | 0,83% |
| Säter Haakon | Norway | 2 675 000 | 0,78% |
| Mace Invest AS | Norway | 2 600 000 | 0,76% |
| Verdipapirfondet Nordea SMB | Norway | 2 600 000 | 0,76% |
| Banque Cantonale Vaudoise | Switzerland | 2 518 270 | 0,74% |
| Flatås Karl Martin | Norway | 2 320 000 | 0,68% |
| Citibank, N.A | Great Britain (Jersey) | 2 121 500 | 0,62% |
| Others | 235 592 506 | 69,09% | |
| Total | 341 000 000 | 100,00% |
Source: VPC AB in Sweden and VPS AS in Norway.
Number of shareholders are about 6 300 as per December 31st 2007
Th e Board of Directors and the Chief Executive Director of International Gold Exploration IGE AB (publ) corporate identity number 556227-8043, with domicile in Stockholm, hereby submits the annual accounts and the Parent Company accounts for the fi nancial year January 1st 2007 to December 31st 2007.
All amounts are entered in TSEK, if not otherwise specifi ed.
International Gold Exploration IGE AB (IGE) is a company listed at the Oslo Stock Exchange (SMB list) and at the Nordic Growth Market (NGM). Its activities are mineral exploration and mining, as well as to possess and administrate concessions, shares and parts of companies that operates with exploration. Th e Parent Company and its subsidiaries are active in Angola, Burundi, Kenya. Sweden and Norway,
Important events during the fi nancial year 2007:
4VSWFZPG'JOMBOE (5, JOUIF-BDBHFBOE-VBOHVJOHB diamond concessions. Th e results from the aerial survey conform to reports by Condiama ( JV between a Portuguese state-owned diamond company and De Beers) from the early 1970's, and observations were made of current local small scale mining activities.
presented to the authorities.
| Unit | 2007 | 2006 | 2005 | 2004 | 2003 | |
|---|---|---|---|---|---|---|
| Revenues | TSEK | - | - | 293 | 280 | 47 775 |
| Operating profit | TSEK | -66 023 | -29 393 | -16 431 | 6 532 | 26 940 |
| Periods profit after taxes | TSEK | -62 529 | -36 404 | -23 207 | 6 253 | 28 445 |
| Profit per share before and after dilution | SEK | -0,181 | -0,116 | -0,087 | 0,032 | 0,147 |
| Balance sheet total | TSEK | 263 699 | 223 450 | 130 775 | 104 412 | 72 814 |
| Profit margin | % | Neg | Neg | Neg | 2 233,3 | 56,4 |
| Equity per share before and after dilution | SEK | 0,718 | 0,640 | 0,389 | 0,393 | 0,345 |
| Solidity | % | 92,8 | 97,6 | 92,4 | 74,5 | 95,4 |
2007 – 2004 are established according to IFRS while 2003 are established according to earlier accounting principles.
Sales during 2007 amounted to 0 SEK (0 TSEK). Result from operations during 2007 amounted to -66 MSEK (-29.4). Result after financial items amounted to -62.5 MSEK (-36.4). Result after taxes during 2007 amounted to -62.5 MSEK (-36.4). Net income per share amounted to
-0.181 SEK (-0.116). Cash flow was -8.8 MSEK (81.9) and balance sheet amounted to 263.7 MSEK (223.5) at period end.
At the 2007 AGM a resolution was made regarding guidelines for the remuneration of those in management personnel, as per note 4 "Employee pay and other remuneration". For the upcoming AGM of 2008, the Board has proposed the following new guidelines for the remuneration of management personnel:
IGE shall have a level of remuneration and employment benefits necessary to recruit and to retain a management PGIJHIDPNQFUFODFBOETVċDJFOUDBQBDJUZUPSFBDIUIFTFU goals, and shall also consider the level of competence of the individual manager. Market value, in other words, is the
guiding principle in setting pay and other remuneration for management personnel in IGE.
The basic remuneration of management personnel is a fixed pay based on the market, which is determined on an individual basis according to the criteria above and special skills of the person.
Retirement benefits for management shall be determi-OFECBTFEPOUIFNBSLFUGPSFRVJWBMFOUQPTJUJPOT
BOECF adjusted according to the special skills of the person. The retirement benefits shall furthermore, as far as possible, be based on payment-based retirement solutions.
The non-monetary benefits (for example cell phone and computer) of the management personnel shall be of the type that assist the performance of work, and be consistent with customary benefits in the market.
Termination compensation and severance pay Termination compensation and severance pay shall in no case exceed 12 months pay.
Non-fixed pay arrangements shall be available, in addition to fixed-pay arrangements, in applicable situations. This type of compensation shall be clearly related to specific set goals, based on simple and transparent constructions.
In those cases where non-fixed pay is realized, the pay shall be determined based on (a) achieving previously set goals on a group and individual level and which are related to management and production results as well as the financial development of the Company and (b) taking into consideration the person's personal development.
The non-fixed pay shall always be limited to a certain maximum which is a specified part of the person's annual pay.
All matters relating to share benefit programs shall be decided upon by the General Meeting.
Positions covered under these guidelines The guidelines shall cover the Managing Director and other positions which are part of the group management.
Exception to the guidelines in special cases The Board has the right to make exceptions to the guidelines in individual cases where there are special reasons to do so.
No new shares have been issued during 2007 in the parent company, International Gold Exploration IGE AB. The subsidiary IGE Nordic AB has issued 6 816 042 new shares (subscription price NOK 12.50) to external investors corresponding to about 25.4% of the total amount of outstanding shares in the company after the new share issue. The new share issue provided IGE Nordic with about MSEK 100.1 before deduction of costs related to the transaction.
IGE has full ownership of six subsidiaries, which are:
IGE Diamond AB corp id no: 556668-1630, domicile Stockholm (former Planet Mineral Holding AB) *(&-UEDPSQJEOP
EPNJDJMF#SJUJTI7JSHJO*TMBOET 4FCJNV&YQMPSBUJPOBOE.JOJOH\$P-UE
DPSQJEOP domicile Nairobi, Kenya.
5BOHBOZJLB&YQMPSBUJPO.JOJOH-UEDPSQJEOP domicile Belize City (dormant) 5BOHBOZJLB3FTPVSDFT-UEDPSQJEOP
EPNJDJMF
Belize City (dormant) 5BOHBOZJLB.JOFSBMT-UEDPSQJEOP
EPNJDJMF Belize City (dormant)
IGE has part-ownership of two subsidiaries, which are:
IGE Nordic AB corp id no: 556493-3199, domicile Stockholm (74,6% held by IGE)
IGE Burundi SA, corp id no: 2796794067, domicile Bujumbura (90% held by IGE)
t 1SJWBUFQMBDFNFOUTVDDFTTGVMMZDPODMVEFE0OUIFUIPG April 2008 IGE successfully carried out a private placement of new share issue of 34 million shares at a price of NOK 1.48 per share. The new share issue provides IGE with 50.3 MNOK before deduction of issue expenses. The new share issue was heavily oversubscribed.
t #VSVOEJ/FXTVSWFZTJOEJDBUFUIFQPTTJCJMJUZUPJODSFBTF the extent of the Mukanda project from 17 million tonnes of 0.64% vanadium to 25-40 million tonnes at 0.6% vanadium minimum.
t *(&/PSEJD"#DPODMVEFTBHSFFNFOUXJUI&OFSHZ 7FOUVSFT-JNJUFEUPFOUFSJOUP+PJOU7FOUVSFGPSVSBOJVN exploration in Sweden.
The environmental policy of the Group states that all activities within the Group shall be carried out in a way that minimizes its impact on the environment. IGE shall work on behalf of a environmental friendly and long term sustainable development. IGE's business concept is based
on the idea that the activity has the least possible negative JNQBDUPOUIFFOWJSPONFOU\$PNQBOZQPMJDZJTUPFĊFDUJWFMZ and in an environmentally friendly way utilize energy, land and material within all of its zones of activity. The main environmental impact from IGE's activities is usage of land, energy consumption and waste handling.
IGE and its subsidiaries face a number of potential risks and uncertainties in its areas of operation which may have a significant impact on the ability to achieve its operational plans for development and production of mineral assets. These risks are further discussed in the 2nd note below.
The number of employees amounted to 42 by the end of 2007 compared with 23 at the beginning of the year. The distribution of the employees is disclosed in note 4.
Investments during 2007 (in gross amounts) in mineral JOUFSFTUT
NBDIJOFSZBOEFRVJQNFOUBNPVOUUP
.4&, (19.7).
Proposed disposition of the company's result The following non restricted funds are at the disposal of the Annual General Meeting (SEK):
| Share premium reserve | 97,363,040 |
|---|---|
| -PTTPGUIFQFSJPE | |
| 64,013,238 |
ɩF#PBSEPG%JSFDUPSTBOEUIF\$IJFG&YFDVUJWF0ċDFS suggest the following disposition:
Balance brought forward: 64,013,238 SEK
| TSEK | Note | 2007 | 2006 |
|---|---|---|---|
| Revenue | - | - | |
| Change in stock | - | -60 | |
| Other external expenses | 4,6,7,8 | -31 824 | -19 043 |
| Personnel expenses | 4,5 | -22 887 | -9 009 |
| Depreciations and write downs | 9 | -11 312 | -1 281 |
| Operating profi t | 3 | -66 023 | -29 393 |
| Financial revenue | 11 | 6 782 | 4 518 |
| Financial expenses | 11 | -3 288 | -11 529 |
| Total fi nancial items | 3 494 | -7 011 | |
| Profi t before tax | -62 529 | -36 404 | |
| Income tax | 19 | - | - |
| Profi t for the year | -62 529 | -36 404 | |
| Profi t for the period attributable to: | |||
| Equity holders of the Parent Company | -61 715 | -36 404 | |
| Minority interest | -814 | - | |
| PROFIT FOR THE PERIOD | -62 529 | -36 404 | |
| Earnings per share attributable to Equity holders of the Parent Company before and after dilution |
20 | -0.181 | -0.116 |
| TSEK | Note | 2007 | 2006 |
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Intangible fi xed assets | |||
| Mineral interests | 9 | 85 624 | 65 328 |
| Tangible fi xed assets | |||
| Plant and machinery | 9 | 6 274 | 2 009 |
| Long-term fi nancial assets | |||
| Long-term receivables | 14 | 27 000 | 103 |
| Total fi xed assets | 118 898 | 67 440 | |
| Current Assets | |||
| Inventory | 16 | 16 | 16 |
| Account receivables | 24 | 871 | 218 |
| Other receivables | 15 | 3 967 | 1 594 |
| Prepaid expenses and accrued income | 12 | 2 313 | 12 502 |
| Short term investments | 17 | 9 807 | 5 006 |
| Cash and cash equivalents | 21 | 127 827 | 136 674 |
| Total current assets | 144 801 | 156 010 | |
| TOTAL ASSETS | 263 699 | 223 450 | |
| EQUITY | |||
| Equity attributable to equity holders of the parent company | 23 | ||
| Share capital | 17 050 | 17 050 | |
| Other capital-contribution | 268 102 | 268 102 | |
| Reserves | 2 548 | 2 118 | |
| Retained earnings and profi t for the period | -75 685 | -69 162 | |
| 212 015 | 218 108 | ||
| Minority interest | 32 884 | - | |
| TOTAL EQUITY | 244 899 | 218 108 | |
| Current liabilities | |||
| Account payables | 25 | 10 772 | 1 785 |
| Other liabilities | 26 | 2 148 | 1 545 |
| Accrued expenses and prepaid income | 13 | 5 880 | 2 012 |
| Total current liabilities | 18 800 | 5 342 | |
| TOTAL EQUITY AND LIABILITIES | 263 699 | 223 450 | |
| PLEDGED ASSETS | 18 | 106 | 103 |
| CONTINGENT LIABILITIES | 18 | 0 | 0 |
| (TSEK) | Equity related to the shareholders of the parent company | ||||||
|---|---|---|---|---|---|---|---|
| 2006 | Share capital |
Other capital contribu tion |
Exchange differences |
Retained earnings and profi t for the year |
Total | Minority interest |
Total Equity |
| Balance at 1 January 2006 | 15 550 | 137 642 | 427 | -32 760 | 120 859 | 120 859 | |
| Assignment of subsidiary | 2 | 2 | 2 | ||||
| Exchange differences | 1 691 | 1 691 | 1 691 | ||||
| Total income and expenses | 1 691 | 1 691 | 1 691 | ||||
| recognised directly in equity | |||||||
| Net result for the period | -36 404 | -36 404 | -36 404 | ||||
| Total income and expenses for the | 1 691 | -36 404 | -34 713 | -34 713 | |||
| fi nancial year 2006 | |||||||
| Transactions with shareholders | |||||||
| New share issue | 1 500 | 130 460 | 131 960 | 131 960 | |||
| Closing balance at 31 December | 17 050 | 268 102 | 2 118 | -69 162 | 218 108 | 218 108 | |
| 2006 | |||||||
| 2007 | |||||||
| Balance at 1 January 2007 | 17 050 | 268 102 | 2 118 | -69 162 | 218 108 | 218 108 | |
| Acquisition | 700 | 700 | |||||
| Exchange differences | 430 | 430 | 430 | ||||
| Total income and expenses recognised directly in equity |
430 | 430 | 700 | 1 130 | |||
| Net result for the period | -61 715 | -61 715 | -814 | -62 529 | |||
| Total income and expenses for the fi nancial year 2007 |
430 | -61 715 | -61 285 | -114 | -61 399 | ||
| Transactions with shareholders | |||||||
| New share issue in subsidiary | 55 192 | 55 192 | 32 998 | 88 190 | |||
| Closing balance at 31 December 2007 |
17 050 | 268 102 | 2 548 | -75 685 | 212 015 | 32 884 | 244 899 |
Number of shares amount to 341,000,000 as at December 31st 2007. During 2007, no dividends have been distributed. Existing reserves refer to exchange diff erences due to operations in foreign currency. Th e accumulated exchange diff erence amounts to 2,548 TSEK.
| TSEK | 2007 | 2006 |
|---|---|---|
| Cash fl ow from operations | ||
| Income after fi nancial items* | -62 529 | -36 404 |
| Adjustments for items not included in cash fl ow** | 11 617 | 8 769 |
| Income tax paid | - | - |
| TOTAL CASH FLOW FROM OPERATIONS BEFORE | -50 912 | -27 635 |
| CHANGE IN WORKING CAPITAL | ||
| CHANGE IN WORKING CAPITAL | ||
| Increase/decrease in inventories | - | 59 |
| Increase/decrease receivables | -8 182 | 1 320 |
| Increase/decrease in liabilities | 15 677 | -2 608 |
| TOTAL CASH FLOW FROM OPERATIONS | -43 417 | -28 864 |
| CASH FLOW USED FOR INVESTMENTS | ||
| Acquisition of tangible assets | -5 276 | -1 366 |
| Acquisition of intangible assets | -31 677 | -19 813 |
| Acquisition of fi nancial assets | -18 151 | - |
| Total cash fl ow used for investments | -55 104 | -21 179 |
| Sale of fi nancial assets | - | - |
| TOTAL CASH FLOW USED FOR INVESTMENTS | -55 104 | -21 179 |
| FINANCIAL ACTIVITIES | ||
| New share issue | 89 764 | 131 960 |
| TOTAL CASH FLOW FROM FINANCIAL ACTIVITIES | 89 764 | 131 960 |
| Change in cash and bank | -8 757 | 81 917 |
| Cash and bank at 1 January | 136 674 | 54 807 |
| Currency exchange difference | -90 | -50 |
| CASH AND BANK AT THE END OF REPORTING | 127 827 | 136 674 |
| PERIOD | ||
| **ADJUSTMENTS FOR ITEMS NOT INCLUDED IN | ||
| CASH FLOW | ||
| Depreciations tangible assets | 761 | |
| Depreciations and writedowns of intangible assets | 10 551 | - |
| Revaluation of short term investments | 299 | |
| Capital gain | - | |
| Capital loss | - | |
| Capital loss referred exchange differences | 6 | 1 281 8 901 -1 592 179 - |
*Th e amount includes received interest rates amounting to 2,221 TSEK (396) and paid interest rates of 2 TSEK (11).
| TSEK | NOTE | 2007 | 2006 |
|---|---|---|---|
| Net sales | - | - | |
| Other external expenses | 4,6,7,8 | -11 696 | -16 054 |
| Personnel expenses | 4,5 | -12 970 | -8 499 |
| Depreciations and writedowns | 9 | -4 369 | -1 207 |
| OPERATING PROFIT | -29 035 | -25 760 | |
| Other fi nancial revenues and similar revenues | 11 | 5 405 | 4 112 |
| Financial expenses and similar expenses | 11 | -9 719 | -11 449 |
| Total fi nancial items | -4 314 | -7 337 | |
| PROFIT BEFORE TAX | -33 349 | -33 097 | |
| Income tax | 19 | - | - |
| TSEK | NOTE | 2007 | 2006 |
|---|---|---|---|
| ASSETS | |||
| FIXED ASSETS | |||
| Intangible fi xed assets | |||
| Mineral interests | 9 | - | 29 196 |
| Tangible fi xed assets | |||
| Plant and machinery | 9 | 342 | 1 734 |
| Long-term fi nancial assets | |||
| Shares in subsidiaries | 10 | 70 554 | 25 917 |
| Receivables related to subsidiaries | 29 | 91 583 | 18 959 |
| Other long term receivables | 14 | - | 103 |
| Total fi xed assets | 162 479 | 75 909 | |
| CURRENT ASSETS | |||
| Account receivables | 24 | - | 218 |
| Other receivables | 15 | 751 | 1 363 |
| Prepaid expenses and accrued income | 12 | 385 | 12 494 |
| Short term investments | 17 | 9 807 | 5 006 |
| Cash and cash equivalents | 21 | 30 488 | 135 769 |
| Total current assets | 41 431 | 154 850 | |
| TOTAL ASSETS | 203 910 | 230 759 | |
| SHAREHOLDERS EQUITY | |||
| Restricted equity | |||
| Share capital | 23 | 17 050 | 17 050 |
| Statutory reserve | 111 345 | 111 345 | |
| Total restricted equity | 128 395 | 128 395 | |
| Non restricted equity | |||
| Share premium reserve | 97 363 | 130 460 | |
| Retained earnings and profi t for the period | -33 349 | -33 097 | |
| Total non restricted equity | 64 014 | 97 363 | |
| Total shareholders equity | 192 409 | 225 758 | |
| CURRENT LIABILITIES | |||
| Account payables | 25 | 6 999 | 1 785 |
| Other liabilities | 26 | 1 761 | 1 545 |
| Accrued expenses and prepaid income | 13 | 2 741 | 1 671 |
| Total current liabilities | 11 501 | 5 001 | |
| TOTAL SHAREHOLDERS EQUITY AND LIABILITIES |
203 910 | 230 759 | |
| PLEDGED ASSETS | 18 | 0 | 103 |
| 18 |
| (TSEK) | Restricted Equity | Non restricted Equity | ||||
|---|---|---|---|---|---|---|
| 2006 | Share capital |
Statutory reserve |
Share premium reserves |
Balanced profit |
Profit for the year |
Total Equity |
| Balance as at 1 January 2006 | 15 550 | 113 602 | 19 653 | -21 910 | 126 895 | |
| Transfer of prior year net result | -2 257 | -19 653 | 21 910 | - | ||
| Profit for the year | -33 097 | -33 097 | ||||
| Total income and expenses for the financial year 2006 |
-33 097 | -33 097 | ||||
| New share issue | 1 500 | 130 460 | 131 960 | |||
| Closing balance at 31 December 2006 | 17 050 | 111 345 | 130 460 | - | -33 097 | 225 758 |
| 2007 | Share capital |
Statutory reserve |
Share premium reserves |
Balanced profit |
Profit for the year |
Total Equity |
| Balance as at 1 January 2007 | 17 050 | 111 345 | 130 460 | -33 097 | 225 758 | |
| Transfer of prior year net result | -33 097 | 33 097 | - | |||
| Profit for the year | -33 349 | -33 349 | ||||
| Total income and expenses for the financial year 2007 |
- | -33 349 | -33 349 | |||
| Closing balance at 31 Dec 2007 | 17 050 | 111 345 | 97 363 | - | -33 349 | 192 409 |
The share capital consists of 341,000,000 shares with the voting power of one vote per share. Each share has a face value of 0.05 SEK.
| (TSEK) | 2007 | 2006 |
|---|---|---|
| Cash fl ow from operations | ||
| Income after fi nancial items* | -33 349 | -33 097 |
| Adjustments for items not included in cash fl ow** | 11 418 | 8 695 |
| Income tax paid | - | - |
| Total cash fl ow from operations before change in working capital | -21 931 | -24 402 |
| CHANGE IN WORKING CAPITAL | ||
| Increase/decrease receivables | -109 218 | -3 972 |
| Increase/decrease in liabilities | 12 799 | -4 571 |
| Total cash fl ow from operations | -118 350 | -32 945 |
| CASH FLOW USED FOR INVESTMENTS | ||
| Acquisition of subsidiary | -13 150 | -2 |
| Acquisition of tangible assets | -186 | -1 006 |
| Acquisition of intangible assets | -10 754 | -16 383 |
| Disposal of intangible assets | 36 190 | - |
| Disposal of tangible assets | 969 | - |
| Total cash fl ow used for investments | 13 069 | -17 391 |
| FINANCIAL ACTIVITIES | ||
| New share issue | - | 131 960 |
| Total cash fl ow from fi nancial activities | - | 131 960 |
| CHANGE IN CASH AND BANK | -105 281 | 81 624 |
| Cash and bank at 1 January | 135 769 | 54 145 |
| Cash and bank at 31 December | 30 488 | 135 769 |
| **Adjustments for items not included in cash fl ow | ||
| Depreciations tangible assets | 609 | 1 207 |
| Depreciations and write downs of intangible assets | 3 760 | - |
| Write down of shares in subsidiaries | 6 750 | - |
| Revaluation of short term investments | 299 | 8 901 |
| Capital loss | - | 179 |
| Capital gain | - | -1 592 |
| Total | 11 418 | 8 695 |
* Th e amount includes received interest rates amounting to 2,101 TSEK (392) and paid interest rates of 2 TSEK (11).
Th e Parent Company International Gold Exploration IGE AB (publ) is a joint stock corporation, with domicile in Stockholm and corporate identity number 556227-8043. Th e corporation's activities consist of mining and mineral prospecting. Th e Annual Report and Parent Company Report for International Gold Exploration IGE AB (publ) with corporate identity number 556227-8043, with domicile in Stockholm, was established by the board on the April 20th 2008 and will be submitted to the annual general meeting for approval on the May 6th 2008.
Th e Group's Reports include the Parent Company and its subsidiaries. Subsidiaries are the companies in which the Parent Company has a deciding infl uence, which involves the possession of more than 50 percent of votes by the Parent Company. Th e Group's Reports were carried out according to the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Boards (IASB) and interpretation from the International Financial Reporting Interpretations Committee (IFRIC) which was approved by the EU-commission for use within the EU. Th e Group's reports were also established according to the Swedish laws and applying the "RR 30:05, "Kompletterande redovisnisningsregler för koncerner", which was published by Redovisningsrådet. Th e Parent Company's Annual Report was established according to the Swedish laws and applying the RR32:06, "Redovisning för juridiska personer", which was published by Redovisningsrådet. Th is fi nancial Group Report is the third that is established according to the IFRS.
Th e consolidated accounts are based on historical acquisition costs except for fi nancial instruments which are accounted for at fair value. All amounts are in Swedish crowns thousands (TSEK) if nothing else is notifi ed.
Th e Parent Company has made its annual report according to "Årsredovisningslagen (1995:1554)" and the "Redovisningsrådets" recommendation RR 32:06, Redovisning för juridiska personer. RR 32:06 implies that the Parent Company shall apply all, by EU approved IFRS statements as far as possible within the framework for the "Årsredovisningslagen" and with consideration to the connection between accounting and the taxation. Th e recommendation states, which exception and additional conditions that shall be done in accordance with the IFRS. Th ere are no existing diff erences between accounting of the Parent Company and the rest of the Group.
Th e following new standards, complements and interpretations, which have not yet been approved by EU, might aff ect the future fi nancial reporting of the IGE Group:
IFRS 8 "Operating segments" (comes in to force for fi nancial years beginning January 1st 2009 or later).
Th e standard replaces the IAS 14 "Segment reporting" and requires that a company reports additional fi nancial and describing information related to its operative reporting segments.
A reporting segment is an operative branch or consolidation of operative branches which fulfi ls certain specifi c criteria's. Th e operative segments shall be presented according to the principles that the management of the company has established in order to manage the company's other operations.
. IGE intends to apply these reporting standards from January 1st 2009.
Group accounting was carried out according to the acquisition method. Acquired subsidiaries are accounted for from the date the decisive infl uence over the subsidiary takes place (time of acquisition). Th e balance sheets of the subsidiaries located outside Sweden is calculated with the current exchange rates at the last day of the report period. Th e currency rate that is used in the income statements is the average rate during the whole period 2007. All group transactions and group unsettled matters and profi t and losses for transactions between group companies that are put into eff ect, will be eliminated at the consolidation.
Th e reports are presented in SEK, which is IGE's functional currency as well as the presentation currency. Transactions in foreign currency are accounted in the functional currency at a rate that is current on the transaction date. Monetary assets and liabilities are converted per the balance sheet date at the day's current rate, currency differences that arise during conversion is accounted for in the income statement. Non monetary assets and liabilities that are accounted for to its historical acquisition value are converted using the currency rate at the time of the transaction. Non monetary assets and liabilities that are accounted for at real value (including costs) converts to the functional currency using the current rate at the time of the evaluation to a real value. The group's subsidiaries are independent and its assets and liabilities are valued at the closing currency rates at the end of the reporting period. The income statements are converted to the average currency rates during the whole reporting period. Exchange differences that may occur on behalf of this does not affect the Group's result, they are accounted for within the Group's equity.
The following currency rates have been used when performing the annual report.
| Closing day rate | Average rate (period) |
|
|---|---|---|
| 2007-12-31 | ||
| 1 NOK in SEK | 1.19 | 1.16 |
| 1 KES in SEK | 0.10 | 0.10 |
| 1 USD in SEK | 6.40 | 6.76 |
| 1 Euro in SEK | 9.44 | 9.25 |
| 2006-12-31 | ||
| 1 NOK in SEK | 1.10 | 1.15 |
| 1 KES in SEK | 0.10 | 0.10 |
| 1 USD in SEK | 6.85 | 7.37 |
| 1 Euro in SEK | 9.05 | 9.26 |
The inventory consists mainly of raw materials and necessities and is valued to the lowest of purchase prices and net sales value. The purchase price is calculated using the FIFO and includes costs that arise during the purchase of the stock and their transportation to its present place and state.
Tangible assets consist of machines and furnishings. Machines and furnishings are recorded in the balance sheet using the acquisition price reduced by the accumulated writedown according to the plan. Depreciation of tangible assets is done linear over the assets estimated duration of use, which is individually estimated to be between 3 to 10 years.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified from exploration and evaluation expenditure (intangible) to mine property and development assets (tangible). As per year end, 2007, the Group has not capitalized any Mine properties and development expenditures in the balance sheet.
The carrying amounts of mine properties and development (including initial and any subsequent capital expenditure) are depreciated to their estimated residual value over the estimated useful lives of the specific assets concerned, or the estimated life of the associated mine or mineral lease, if shorter.
(Exploration and evaluation expenditure) External direct expenditures related to Exploration and evaluation costs, including the costs of acquiring licenses, are capitalized as exploration and evaluation assets on an area of interest basis. Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either:
All capitalized exploration and evaluation expenditure is monitored for indications of impairment on a cash-generating unit basis. The cash generating unit shall not be larger than the area of interest. If sufficient data exists to determine technical feasibility and commercial viability, and facts and circumstances suggest that the carrying amount exceeds the recoverable amount, the capitalized expenditure which is not expected to be recovered is charged to the income statement.
Long term receivables are attributable to investment guarantees paid to the Angolan state diamond company. Endiama. Each granted diamond license in Angola is conditioned by a payment of MUSD 1.4 as a long term deposit. Each concession consists of two parts; alluvial and kimberlite. The required guarantee attributable to the alluvial part amounts to USD 400,000. respectively USD 1,000,000 for the kimberlitic. The money is deposited at the Angolan state (Endiama)
until the investing partner has accomplished the minimum framework and the plan of investments in accordance with the "Contract of the Association in Participation". When the investing partner has fulfilled its obligations according to the contract, the guarantee will be liberated and its value will immediately be considered as investment expenses of the project in compliance with the presented plan of needs.
IGE has paid investment guarantees for three licenses by the end of the reporting period; Lacage. Luanguinga and Cariango.
The group's income is accounted for when the essential risks and benefits that is related to the owning of the inventory has been transferred to the buyer. When the right of owning is transferred to the customer in the extent that it is probable that the economical benefits will descend to the group and when the income can be calculated in a reliable way.
Income related to interests is allocated to the period in which they occur and is referred to the group's bank accounts. Dividends are taken up as income based on when the decision regarding the availability of the dividend funds is made. No income is accounted for based on the current operations of the Group.
In the Group's Annual Report, the current and the deferred taxes are accounted for. Current taxes are the taxes that shall be paid or received regarding the current year, using the tax rate that was decided or in reality was decided per the balance sheet date applied on the taxable income and with adjustment of current tax referring to earlier periods. Deferred taxes are calculated according to the balance sheet method with basis in temporary differences between accounted and taxable values of assets and liabilities. Deferred tax claims regarding deduction approved temporary differences and deficit deductions accounted only in case that those possibly will be used. Deferred tax claims have not been accounted for as deductions of loss because they are estimated to be hardly realizable.
The Board and management of IGE have identified the issues listed below, which can affect the appraisal of the Group's income statement and financial balance. The development within these areas is continuously followed up by the management and the Board.
The group has invested considerable amounts in refinement of exploration permits. The financial statements include mainly permits for which the Company has carried out advanced operations as geology, geophysics, drillings, airborne measurements etc. Capitalized expenditures referable to the above stated activities have been capitalized as mineral interests, which amounts to 85.6 MSEK. Depreciation of capitalized expenditures referable to mineral interests is done in accordance with the paragraph "intangible assets" above.
The tax deductions referable to deficits of the Group's activities abroad are not valued.
Within IGE the primary segment division is based on the geographical regions that are subject to risks and possibilities that are different from each other. Presently secondary segmentation is not considered.
Current assets and current liabilities are composed of values that can be regained respectively paid within twelve months counted from the balance sheet date. The other assets and liabilities are accounted as tangible fixed assets and longterm liabilities respectively.
International Gold Exploration IGE AB registered the company IGE Burundi SA 1 February 2007 with an equity amounting to seven MSEK. of which IGE has paid 6.3 MSEK. IGE owns 90 percent of the company. Remaining ten percent are owned by a local partner. The founding of the company was followed by negotiations regarding obtaining licenses. IGE Burundi SA is responsible for the Group's activities in Burundi. The company owns and manages the Group's assets and employs IGE's personnel in Burundi.
During the previous year of operations, 2006, IGE acquired three wholly owned subsidiaries with a total equity amounting to two TSEK. The subsidiaries were registered during 2006 and hold no assets, liabilities or contingent liabilities at the end of the reporting period. The acquired companies have been consolidated into the group's accountings after the time of the acquirement.
IGE bought, in connection to the new share issue in IGE Nordic, IGE Diamond AB of IGE Nordic AB. The company has got no operations, is 100% owned by IGE and has a book value of 100 TSEK.
In connection with the new share issue in IGE Nordic a minority interest occurred. 25.4 percent of the company is not owned by the Parent Company, International Gold Exploration IGE AB. The preparations of IGE Nordic in order to carry out the IPO were done by the sell-out of all assets from Parent Company, IGE. All liabilities and costs related to the activities in the Nordic region within the IGE Group was transferred to the subsidiary, IGE Nordic from
the Parent Company. All assets have been bought from the Parent Company. The Initial Public Offer in IGE Nordic provided the Company with about 88 MSEK (after deduction of costs related to the transaction) in cash. 33 MSEK of the contributed equity is referable to minority interest
The Group's result for 2007 includes a loss amounting to TSEK 814 recorded in the subsidiaries IGE Nordic AB and IGE Burundi SA which refers to the minority owners.
Financial instruments reported as assets in the balance sheet includes: Liquid funds, accounts receivables and short-term investments. The liabilities consist of account payables. Financial instruments are accounted for to its real value. A financial asset or financial liability is accounted for in the balance sheet when the company becomes a part of an agreement regarding the asset or liability. Short-term investments refer to holdings in MinMet Plc and an investment in guaranteed bonds. The short-term investments are valued to its real value in the income statement. IGE has no derivative instruments and no hedge accounting is applied.
Cash and cash equivalents refers to cash at bank.
Within the Group there are only fixed-fee retirement plans. Commitments regarding fees to the fixed-fee retirement plans are reported as costs when they occur.
A contingent liability, on behalf of IGE, could be for example, damage tro the environmental that the company's operations have caused within the concession area. IGE is obligated to restore the environment to its initial conditions before returning the permit. This may result in costs that IGE is charged for. Examples of damages are; wheel track in the terrain, lumbered trees etc. The company considers these contingent liabilities to be negligible which results in that the balance sheet item regarding the contingent liabilities are amounting to 0.
Leasing is classified in the Group accounting either as financial or operational. Financial leasing exists when the economic risks and the benefits that are associated with ownership in all essential points are transferred to the leasing user, all other leasing is classified as operational leasing. Within the Group there exists no financial leasing. Leasing fees related to operational leasing are cost accounted linearly over the duration starting from the time of utilization.
The Company has from 2007 applied IFRS 7 "Financial Instrument". The application of this principle has not resulted in any changes of the accountings. The principle puts higher demand on the level of information added by Company in the financial report. This holds also for the change over from RR 30:5 to 30:6, which also puts higher requirements on the information enclosed in the Group accountings.
At the extraordinary general meeting of October 17th 2005, a resolution was made to issue one promissory note at a nominal value of SEK 100. 11 7,00,000 options, which gives the holder the right to subscribe for shares in International Gold Exploration IGE AB, were attached to the promissory note. The promissory note was issued to the Group subsidiary IGE Nordic AB (former Planet Mineral AB). 2,440,000 of these 11,700,000 options have been allocated. The exercise price of the option is 8.50. The holders of the options have the right to exercise the right during the period January 1st 2008 – October 31st 2008.
A new incentive programme was resolved by the extraordinary general meeting (EGM) on June 13th 2007. The EGM also decided to cancel the previously launched incentive programme (described above). The incentive programme included 6,000,000 options for the issue of shares in International Gold Exploration AB. The exercise price of the option is 6.40. 2,550,000 of these 6,000,000 options have so far been allocated. The holder of the option has, according to the resolution, the right to exercise the options during the period July 1st 2009 – December 31st 2009.
The holders of the share warrants, in both programs, have paid a price adjusted to the market according to the Black & Scholes option pricing formula.
Total number of outstanding shares before full utilization of options amounted to 341,000,000 at the end of 2007.
In connection to the spin off of IGE Nordic, all options that have not yet been allocated have been transferred to the Parent Company, IGE.
Shareholdings in subsidiaries are disclosed, in the parent company, to the acquisition value of the shares with deductions of contingent depreciation.
Th rough its activities, IGE is, exposed to risks in its fi nancial items such as liquid means, short-term claims and debts. Th e risks associated to those instruments are primarily:
How those risks are handled and controlled is regulated in the fi nancial policy that the Company has adopted. Th is policy controls the economic measures and constitutes the frame within which the Company operates.
Below follows a brief description of additional risks that IGE considers it to be exposed to through its activities. Th e management of the Group is aware of the risks associated with the operations and constantly aims to work in good practice in order to manage these risks in the best possible way.
Interest risks are related to the risk that IGE is exposed to due to the fact that changes on the market's interest rate can aff ect the net profi t. IGE's risk exposure is small since the majority of its liquid assets are placed in bank accounts in SEK.
Currency risks refer to the risk that the value of a fi nancial instrument may vary depending on the changes of conversion rate of the currencies. IGE's accounts are in Swedish Crowns (SEK). Th e Company operates in other countries and in other currencies which results in a company exposure of currency risks which may aff ect the company's profi t and amount of liquid assets.
Liquidity risk implies that the Group is not able to fi nd venture capital to the extent that it needs in order to fi nance the Group's activities. Th e Group considers itself to have access to a large number of diff erent sources of venture capital to competitive prices. If the Group decides to increase the rate of its operations and thereby also it's burn rate, this decisions shall be based upon a documented success within the Group's activities which implies that the supply of venture capital available for the Group, on probable grounds, will be enough.
Political risk is defi ned as the business risk that may occur as a result of diff erent political decisions. Examples are uncertainty of the validity of the group's agreements, uncertainty of a new political majority or changes of the local fi nance and fi scal policies. Another example may be changes in the legislation concerning the mineral and mining "line of business", in terms of changed tax rates, environmental fees and changes in the situation concerning the governmental opinions regarding monopoly. Th ese types of risks are more diffi cult to predict and consequently, more diffi cult to hedge. IGE has therefore decided to carry out an active coverage of the political situations within its countries of operations. IGE also has established close relationships with the governments and decision makers on all relevant markets. Th e management of IGE considers this risk. within each country of activity. to be manageable.
Besides the eff ects of transaction risks, the conversion risk also aff ects IGE's profi t when the foreign subsidiaries are consolidated. Th ese eff ects happen when the profi t/loss of the foreign subsidiary is converted to Swedish Crowns (conversion risks in income statement and balance sheet). Th is result in a risk exposure related to currencies; changes in the currency rate can aff ect the profi t and capital of the Group.
A decline in the price of a metal or diamonds might aff ect the value of IGE's mineral assets and reserves. Th e company compensates this risk by diversifying its operations to include various types of minerals and precious stones.
| Jan-Dec 2007 | ||||||
|---|---|---|---|---|---|---|
| (TSEK) | Sweden | Kenya | Angola | Burundi | Norway | In total |
| Revenue | - | - | - | - | - | 0 |
| Depreciation of concessions | -10 551 | - | - | - | - | -10 551 |
| Depreciation according to plan | -667 | -94 | - | - | - | -761 |
| Operating profi t | -45 142 | -4 108 | -11 278 | -5 495 | - | -66 023 |
| Profi t before tax | -41 345 | -4 276 | -11 413 | -5 495 | - | -62 529 |
| Fixed assets | 53 928 | 9 918 | 47 834 | 1 124 | 6 094 | 118 898 |
| Current assets | 139 655 | 3 296 | 1 523 | 327 | - | 144 801 |
| Short-term liabilities | 18 153 | 647 | - | - | - | 18 800 |
| Investments (gross amounts) | 9 631 | 818 | 47 834 | 1 124 | 3 363 | 62 770 |
| Jan-Dec 2006 | ||||||
|---|---|---|---|---|---|---|
| (TSEK) | Sweden | Kenya | Angola | Burundi | Norway | In total |
| Revenue | - | - | - | - | - | 0 |
| Depreciation of concessions | -772 | - | - | - | - | -772 |
| Depreciation according to plan | -434 | -74 | - | - | - | -508 |
| Operating profi t | -27 561 | -1 832 | - | - | - | -29 393 |
| Profi t before tax | -32 696 | -1 908 | - | - | - | -34 604 |
| Fixed assets | 55 515 | 9 194 | - | - | 2 731 | 67 440 |
| Current assets | 144 871 | 607 | 10 242 | 290 | - | 156 010 |
| Current liabilities | 5 012 | 330 | - | - | - | 5 342 |
| Investments (gross amounts) | 13 542 | 3 498 | - | - | 2 661 | 19 701 |
All countries are classifi ed as primarily segments. Secondary segments do not exist.
| 2007 | 2006 | |||
|---|---|---|---|---|
| Average number of employees |
Of which men in % |
Average number of employees |
Of which men in % |
|
| Parent Company | 7 | 71% | 10.1 | 77% |
| Subsidiaries | 35 | 79% | 12.8 | 84% |
| Group Total | 42 | 80% | 22.9 | 81% |
| Of which Sweden | 11.5 | 82% | 10.1 | 77% |
| Of which Angola | 3 | 67% | - | - |
| Of which Burundi | 3 | 67% | - | - |
| Of which Kenya | 24.5 | 79% | 12.8 | 84% |
| 2007 | 2006 | |||||
|---|---|---|---|---|---|---|
| (TSEK) | Salaries and other compensations |
Of which pension costs |
Social contribution expenses |
Salaries and other compensations |
Of which pension costs |
Social contribution expenses |
| Parent Com | ||||||
| pany | ||||||
| Sweden | 10 373 | 962 | 2 797 | 6 231 | 403 | 2 203 |
| Subsidiaries | ||||||
| Sweden | 2 949 | 188 | 896 | - | - | - |
| Angola | 3 675 | - | - | - | - | - |
| Burundi | 829 | - | - | - | - | - |
| Kenya | 1 437 | - | 6 | 257 | - | 3 |
| Total | 19 263 | 1 150 | 3 699 | 6 488 | 403 | 2 206 |
| 2007 | 2006 | ||||
|---|---|---|---|---|---|
| Board of Directors | Board of Directors | ||||
| (TSEK) | and CEO | Other employees | and CEO | Other employees | |
| Parent Company | |||||
| Sweden | 4 404 | 5 969 | 1 908 | 4 323 | |
| Subsidiaries | |||||
| Sweden | 1 596 | 1 353 | - | - | |
| Angola | - | 3 675 | - | - | |
| Burundi | - | 829 | - | - | |
| Kenya | - | 1 437 | - | 257 | |
| Total | 6 000 | 13 263 | 1 908 | 4 580 |
| 2007 | 2006 | |||
|---|---|---|---|---|
| (TSEK) | Board of Directors | CEO | Board of Directors | CEO |
| Parent Company | ||||
| Sweden | - | 427 | - | 193 |
| Subsidiaries | ||||
| Sweden | - | 121 | - | - |
| Angola | - | - | - | - |
| Kenya | - | - | - | - |
| Burundi | - | - | - | - |
| Total | - | 548 | - | 193 |
Information about sickness absence based on ÅRL Cap 5 § 18 are not given.
The Board is composed by five members of whom 100 percent are men.
AGM:s resolution on remuneration guidelines for management personnel
At the 2007 AGM that was held on May 10th 2007, the following resolution was made regarding guidelines for the remuneration of those in management personnel. The below guidelines are in force until the AGM of 2008, that will be held on May 6th 2008.
IGE shall have a level of remuneration and employment benefits necessary to recruit and to retain a management of high competence and sufficient capacity to reach the set goals, and shall also consider the level of competence of the individual manager. Market value, in other words, is the guiding principle in setting pay and other remuneration for management personnel in IGE.
The basic remuneration of management personnel is a fixed pay based on the market, which is determined on an individual basis according to the criteria above and special skills of the person.
Retirement benefits for management shall be determined based on the market for equivalent positions, and be adjusted according to the special skills of the person. The retirement benefits shall furthermore, as far as possible, be based on payment-based retirement solutions.
The non-monetary benefits (for example cell phone and computer) of the management personnel shall be of the type that assist the performance of work, and be consistent with customary benefits in the market.
Termination compensation and severance pay Termination compensation and severance pay shall in no case exceed 12 months pay.
Non-fixed pay arrangements shall be available, in addition to fixed-pay arrangements, in applicable situations. This type of compensation shall be clearly related to specific set goals, based on simple and transparent constructions.
In those cases where non-fixed pay is realized, the pay shall be determined based on (a) achieving previously set goals on a group and individual level and which are related to management and production results as well as the financial development of the Company and (b) taking into consideration the person's personal development.
The non-fixed pay shall always be limited to maximum 50% of the person's annual fixed pay.
All matters relating to share benefit programs shall be decided upon by the Annual General Meeting.
Positions covered under these guidelines The guidelines shall cover the CEO and other positions which are part of the group management.
Exception to the guidelines in special cases The Board of Directors has the right to make exceptions to the guidelines in individual cases where there are special reasons to do so.
| Director fee (according to | ||
|---|---|---|
| resolution from AGM) | Salary | Other benefi ts |
| 300 | - | - |
| 200 | - | - |
| 200 | - | - |
| - | - | - |
| 200 | - | - |
| - | 440 | 1 604 |
Board members that are not employees of any of the Group's companies or related companies, receive a fee,resolved by the AGM, of 200 TSEK per year. Th e Chairman of the Board receives 300 TSEK, according to a resolution from the AGM.
Th e Managing Director receives a fi xed salary. Between the Company and the Managing Director there is a termination agreement of 12 months' notice on behalf of the Company and 6 months on behalf of the Chief Executive Offi cer. Th ere is no agreement on damages for contract liquidation.
Swedish personnel have pension insurances that give them the right to receive future pension payments that are dependent of how the amount contributed is administrated by the insurance company.
During the year of 2007 IGE has paid salaries of 1,080 TSEK and other benefi ts of 588 to the former CEO. Th e employment agreement between IGE and former CEO was terminated as per Augus 31st. He was after that at the Company's disposal until the end of the year 2007.
| Group | Parent Company | |||
|---|---|---|---|---|
| (TSEK) | 2007 | 2006 | 2007 | 2006 |
| Ernst & Young. auditing | 573 | 520 | 455 | 497 |
| Ernst & Young. other assignments | 434 | 290 | 234 | 290 |
| Total | 1 007 | 810 | 689 | 787 |
| (TSEK) | 2007 | 2006 |
|---|---|---|
| PA Resources AB. related party through its managing director (Ulrik Jansson) who is a board member of IGE. | 72 | 255 |
| Company Bill Sundberg Konsult | - | 47 |
| Total | 72 | 302 |
PA Resources AB has invoiced IGE 72 TSEK during the reporting period regarding offi ce services and rent of offi ce space. PA Resources is a related party due to its Managing Director Ulrik Jansson, who is a member of the board in
IGE. Bill Sundberg Konsult is by way of its owner Bill Sundberg related part to IGE due to his membership of the IGE Board of Directors.
| (TSEK) | Premises | Vehicles | In total |
|---|---|---|---|
| Valid 2008 | 1 803 661 | 20 811 | 1 824 472 |
| Valid 2009-2011 | 1 824 109 | - | 1 824 109 |
The Group has leasing agreements regarding rental contracts for rented premises and vehicles that were made based on normal, market conditions. For 2007 the rental costs were
1,776 TSEK. Future rental costs according to agreed rental contract are disclosed in the table above.
| (TSEK) | ||||
|---|---|---|---|---|
| Tangible assets | Group | Parent | ||
| Equipment and furnishings | 2007-12-31 | 2006-12-31 | 2007-12-31 | 2006-12-31 |
| Acquisition value at opening of period | 2 817 | 1 461 | 2 353 | 1 461 |
| Acquisition during the report period (year) | 5 276 | 1 356 | 187 | 1 369 |
| Write-down | -449 | - | -285 | -477 |
| Disposal during the period | - | - | -1 710 | - |
| Acquisition value at year-end of existing | ||||
| equipments and furnishings | 7 644 | 2 817 | 545 | 2 353 |
| Accumulated depreciation at opening of period according to | ||||
| plan | -808 | -299 | -619 | -299 |
| Write-down | 194 | - | 125 | 114 |
| Disposal during the period | - | - | 741 | - |
| Depreciation according to plan | -756 | -509 | -450 | -434 |
| Accumulated depreciation at year end according | ||||
| to plan | -1 370 | -808 | -203 | -619 |
| Book value at year-end of equipment and | ||||
| furnishings | 6 274 | 2 009 | 342 | 1 734 |
| (TSEK) | ||||
|---|---|---|---|---|
| Intangible assets | Group | Parent | ||
| Mineral interests | 2007-12-31 | 2006-12-31 | 2007-12-31 | 2006-12-31 |
| Acquisition value at opening of period | 67 107 | 47 480 | 30 975 | 14 593 |
| Acquisition during the report period (year) | 31 677 | 19 813 | 10 754 | 16 382 |
| Discardment | -5 539 | - | -5 539 | - |
| Currency exchange differences | -830 | -186 | - | - |
| Disposal during the period | - | - | -36 190 | - |
| Book-value at year-end of the remaining mineral | ||||
| interests | 92 415 | 67 107 | - | 30 975 |
| Accumulated write downs at year end | -1 779 | -1 007 | -1 779 | -1 007 |
| Write-downs during period | -10 551 | -772 | -3 760 | -772 |
| Discardment | 5 539 | - | 5 539 | - |
| Accumulated write downs at year end | -6 791 | -1 779 | - | -1 779 |
| Book-value at year-end | 85 624 | 65 328 | - | 29 196 |
| 2007 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Parent Company | ||||||||
| Corporate | No of | |||||||
| Company | id no | Seat | shares | Share | Currency | Book value | Equity | Profit |
| Sebimu Exploration | ||||||||
| and Mining Ltd | 27481 | Nairobi | 10 000 | 100% | KES | 2 635 900 | neg | -4 276 062 |
| IGE Nordic AB | 556493-3199 | Stockholm | 20 000 000 | 74,6% | SEK | 61 515 908 | 128 783 025 | -4 451 576 |
| IGE Diamond AB | 556668-1630 | Stockholm | 1 000 | 100% | SEK | 100 000 | 88 003 | -1 417 |
| IGE Ltd | 20034 | B V I | 3 | 100% | USD | 22 | neg | -11 412 715 |
| IGE Burundi SA | 2796794067 | Bujumbura | 1 000 | 90% | BIF | 6 300 000 | 1 778 386 | -5 494 926 |
| Tanganyika | ||||||||
| Exploration & Mining | ||||||||
| Ltd | 52 816 | Belize City | 1 | 100% | USD | 720 | 720 | 0 |
| Tanganyika | ||||||||
| Resources Ltd | 52 848 | Belize City | 1 | 100% | USD | 720 | 720 | 0 |
| Tanganyika Minerals | ||||||||
| Ltd | 52 849 | Belize City | 1 | 100% | USD | 720 | 720 | 0 |
| Subsidiary to | ||||||||
| IGE Ltd | ||||||||
| IGE Angola Limitada | 5401165587 | Luanda | 150 000 | 95% | USD | 960 510 | 960 510 | 0 |
| (TSEK) | |
|---|---|
| Acquisition value at opening of period | 25 917 |
| Acquisition during the report period (year) | 51 387 |
| Write down on shares in subsidiary | -6 750 |
| Acquisition value at year-end | 70 554 |
| Financial revenue | Group | Parent Company | ||
|---|---|---|---|---|
| (TSEK) | 2007 | 2006 | 2007 | 2006 |
| Capital gain Lappland Goldminers AB | - | 907 | - | 907 |
| Capital gain Saga Oil AS | - | 685 | - | 685 |
| Received payment for issued share warrants | 1 043 | 401 | 629 | - |
| Calculation of real value Saga Oil AS | - | 2 127 | - | 2 127 |
| Calculation of real value MinMet Plc | 2 576 | - | 2 576 | - |
| Valuation of other short-term investments | 75 | - | 75 | - |
| Interests | 2 221 | 396 | 2 101 | 392 |
| Exchange gains | 867 | 2 | 24 | 1 |
| Total financial revenue | 6 782 | 4 518 | 5 405 | 4 112 |
| Financial expenses | Group | Parent Company | ||
|---|---|---|---|---|
| (TSEK) | 2007 | 2006 | 2007 | 2006 |
| Capital loss of Saga Oil AS | - | -179 | - | -179 |
| Valuation of real value Saga Oil AS | - | -2 127 | - | -2 127 |
| Valuation of MinMet Plc | -2 572 | -8 901 | -2 572 | -8 901 |
| Valuation of other short-term investments | -378 | - | -378 | - |
| Write down of shares in subsidiary | - | - | -6 750 | - |
| Interests | -11 | -11 | -2 | -11 |
| Exchange losses | -327 | -311 | -17 | -231 |
| Total financial expenses | -3 288 | -11 529 | -9 719 | -11 449 |
| Financial revenue | Group | Parent Company | ||
|---|---|---|---|---|
| (TSEK) | 2007 | 2006 | 2007 | 2006 |
| Prepaid insurance fees | - | 244 | - | 244 |
| Prepaid costs | 681 | 413 | 255 | 413 |
| Prepaid investment guarantee Angola* | - | 10 242 | - | 10 242 |
| Prepaid rentals | 151 | 160 | 130 | 152 |
| Prepaid leasing fees | - | 32 | - | 32 |
| Prepaid concessions costs | 1 481 | 1 411 | - | 1 411 |
| Year-end balance | 2 313 | 12 502 | 385 | 12 494 |
* The prepaid investment guarantee to Angola consists of prepaid cash which is deposited at an account held by the Angolan state diamond company Endiama.
The investment guarantees paid to Angola attributable to the diamond licenses has in previous reports been accounted for as prepaid expenses and accrued income. As per the end of 2007 IGE has, due to changes in the nature of these claims, reclassified them. They are now accounted for as Long-term receivables in the balance sheet.
| Financial revenue | Group | Parent Company | ||||
|---|---|---|---|---|---|---|
| (TSEK) | 2007 | 2006 | 2007 | 2006 | ||
| Accrued personnel vacations costs | 574 | 445 | 164 | 445 | ||
| Accrued social security charges | 574 | 172 | 288 | 171 | ||
| Calculated accrued social security charges | 364 | 238 | 215 | 238 | ||
| Special remuneration taxes | 352 | 189 | 306 | 184 | ||
| Accrued salaries | 593 | 15 | 0 | 0 | ||
| Accrued remuneration of the board | 950 | 408 | 900 | 408 | ||
| Accrued consultant fees in Kenya | - | 310 | - | - | ||
| Accrued costs related to new share issue IGE Nordic AB | 1 246 | - | - | - | ||
| Accrued expenses related to SGU education in Angola | 289 | - | 289 | - | ||
| Other accrued costs | 938 | 235 | 579 | 225 | ||
| Year-end balance | 5 880 | 2 012 | 2 741 | 1 671 |
| (TSEK) | 2007 | 2006 |
|---|---|---|
| Investment guarantee Endiama | 26 894 | - |
| Deposition Bergsstaten | 106 | 103 |
| Total | 27 000 | 103 |
Long- term receivables are attributable to investment guarantees paid to the Angolan state diamond company. Endiama. Each granted diamond license in Angola is conditioned by a payment of MUSD 1.4 as a long term deposit. The money is deposited until the investing partner has accomplished the minimum framework and the plan of investments in accordance with the "Contract of the Association in Participation". When the investing partner has fulfilled its obligations according to the contract, the guarantee will
be liberated and its value will immediately be considered as investment expenses of the project in compliance with the presented plan of needs.
IGE has paid investment guarantees for three licenses by the end of the reporting period; Lacage, Luanguinga and Cariango.
| Group | Parent | |||
|---|---|---|---|---|
| (TSEK) | 2007 | 2006 | 2007 | 2006 |
| V A T receivables | 1 292 | 1 028 | 651 | 1 028 |
| Delayed drilling activities in Kenya | 1 728 | - | - | - |
| Other receivables not subjected to interests | 947 | 566 | 100 | 335 |
| Total | 3 967 | 1 594 | 751 | 1 363 |
| Group | 2007 | 2006 |
|---|---|---|
| Inventory | 16 | 16 |
Inventory is related to the subsidiary in Kenya and consists of gold. The inventory is valued by its net sales price reduced by sales costs.
| Financial revenue | Group | |
|---|---|---|
| (TSEK) | 2007 | 2006 |
| MinMet Plc | 5 010 | 5 006 |
| Ubs So 4 G10 Tr 091012 | 1 575 | - |
| CS AIO PLUS 16 090527 | 1 417 | - |
| Rbs Autopilot 5 - Plus Trygghet | 1 805 | - |
| Total short term financial investments | 9 807 | 5 006 |
| Group | 2007 | 2006 |
|---|---|---|
| Deposition Bergsstaten | 106 | 103 |
In connection with exploration activities, the Group has commitments to compensate for damages and infringements that are a consequence of the operations. The value of the estimated costs is not material and therefore no undertaking was made
| Group | Parent Company | |||
|---|---|---|---|---|
| (TSEK) | 2007 | 2006 | 2007 | 2006 |
| Actual tax | - | - | - | - |
| Adjustment actual taxes earlier years | - | - | - | - |
| Deferred tax | - | - | - | - |
| Actual tax reported in the income statement | - | - | - | - |
| Profit before tax | -62 529 | -36 404 | -33 349 | -33 097 |
| Expected tax according to Swedish tax rate (28%) | 17 508 | 10 193 | 9 338 | 9 267 |
| Adjustment for tax rates in other countries | 994 | - | - | - |
| Other non-taxable/non-deductible | -1 683 | -2 988 | -1 682 | 0 |
| Deferred taxes in theory from earlier losses that has not been used | -15 827 | -7 205 | -7 656 | -9 267 |
| Others | -992 | 0 | 0 | 0 |
| Total tax costs | 0 | 0 | 0 | 0 |
Accumulated tax related deficit of the Group amounts to 91,902 TSEK (59,149), which gives a put off tax that can be recuperated of 32,389 TSEK (16,562). Within the total deficit amount there is an accumulated deficit deduction of 20,221 TSEK (20,221), which according to tax laws in effect, is frozen and can not be used until the accounting year 2010.
Accumulated tax related deficit of the Parent Company amounts to 64,037 TSEK (55,630) which gives a put off tax that can be recuperated of 17,930 TSEK (15,576). Within
the total deficit amount there is an accumulated deficit deduction of 18,518 TSEK (18,518), which according to tax laws in effect, is frozen and can not be used until the accounting year 2010.
No current or deferred tax claims or tax liabilities exist within the Group or Parent company. Deferred tax claims were not accounted as deductions of loss because its realization is difficult to estimate. Deficit deduction can be used without any time limit.
| 2007 | 2006 | |
|---|---|---|
| Profit related to Parent Company's shareholders (TSEK) | -61 715 | -36 404 |
| Average number of shares during the reporting period | 341 000 000 | 313 000 000 |
| Profit per share before and after dilution* | -0.181 | -0.116 |
* See note 27
The profit per share is calculated as the profit related to the Parent Company's shareholders divided by the average number of shares during the current year.
Liquid assets as at December 31st 2007 amounted to 127,827 TSEK (136,674) and consisted completely of bank deposits. The Parent Company's liquid assets as at December 31st 2007 amounted to 30,488 TSEK (135,769) and consisted completely of bank deposits
International Gold Exploration IGE AB
t 1SJWBUFQMBDFNFOUTVDDFTTGVMMZDPODMVEFE0OUIFUIPG April 2008 IGE successfully carried out a private placement of new share issue of 34 million shares at a price of NOK 1.48 per share. The new share issue provides IGE with 50.3 MNOK before deduction of issue expenses. The new share issue was heavily oversubscribed.
IGE Diamonds AB
amond production in Angola, additional reports reveal that the resources are substantially larger than initially estimated. The first diamonds are to be expected from the Luxinge project as early as November 2008. Further surveys will take place in order to confirm the presence of potential diamondiferous kimberlites in the area.
t #VSVOEJ/FXTVSWFZTJOEJDBUFUIFQPTTJCJMJUZUPJODSFBTF the extent of the Mukanda project from 17 million tonnes of 0.64% vanadium to 25-40 million tonnes at 0.6% vanadium minimum.
t *(&/PSEJD"#DPODMVEFTBHSFFNFOUXJUI&OFSHZ Ventures Limited to enter into Joint Venture for uranium exploration in Sweden.
Share capital amounts to 17,050,000 SEK (17,050,000) and consists of 341,000,000 (341,000,000) shares.
| Increase of number of |
Increase of | Total number | Total share | Face value | ||
|---|---|---|---|---|---|---|
| Date | Transaction | shares | share capital | of shares | capital | (SEK) |
| 1983-04-18 | Foundation | 500 | 50 000 | 100 | ||
| 1983-09-20 | Split 50:1 | 24 500 | 25 000 | 50 000 | 2 | |
| 1989-09-22 | New share issue | 5 000 | 10 000 | 30 000 | 60 000 | 2 |
| 1989-10-10 | New share issue | 200 000 | 400 000 | 230 000 | 460 000 | 2 |
| 1989-11-22 | New share issue | 560 000 | 1 120 000 | 790 000 | 1 580 000 | 2 |
| 1997-01-01 | Split 40:1 | 30 810 000 | 31 600 000 | 1 580 000 | 0.05 | |
| 1997-11-18 | New share issue | 25 000 000 | 1 250 000 | 56 600 000 | 2 830 000 | 0.05 |
| 2000-07-18 | New share issue | 21 120 000 | 1 056 000 | 77 720 000 | 3 886 000 | 0.05 |
| 2001-11-19 | New share issue | 77 560 000 | 3 878 000 | 155 280 000 | 7 764 000 | 0.05 |
| 2002-10-02 | New share issue | 37 920 000 | 1 896 000 | 193 200 000 | 9 660 000 | 0.05 |
| 2004-05-12 | New share issue | 5 000 000 | 250 000 | 198 200 000 | 9 910 000 | 0.05 |
| 2005-03-16 | Exercised warrant | 50 000 000 | 2 500 000 | 248 200 000 | 12 410 000 | 0.05 |
| 2005-05-24 | New share issue | 19 000 000 | 950 000 | 267 200 000 | 13 360 000 | 0.05 |
| 2005-07-05 | New share issue | 25 000 000 | 1 250 000 | 292 200 000 | 14 610 000 | 0.05 |
| 2005-10-19 | New share issue | 18 000 000 | 900 000 | 310 200 000 | 15 510 000 | 0.05 |
| 2005-12-12 | New share issue | 800 000 | 40 000 | 311 000 000 | 15 550 000 | 0.05 |
| 2006-12-07 | New share issue | 30 000 000 | 1 500 000 | 341 000 000 | 17 050 000 | 0.05 |
The suggested divestment of the Group result to the shareholders for the year of 2007 amounts to 0 SEK (0) per share. The Group considers reinvesting all generated profits in the
operations, by which reason no dividend payments will be proposed during the coming years. The Group aims to have low or no debt ratio.
| Group | Parent | |||
|---|---|---|---|---|
| (TSEK) | 2007 | 2006 | 2007 | 2006 |
| Accounts receivables | 871 | 218 | - | 218 |
Reversal of earlier write-downs carried out has not been made. Closing balance as per year end 2006 has been settled during the year. Year end balance as per 2007 has accrued during second half of 2007 and consists of costs related
to jointly operated projects (that initially has been paid by IGE). No doubtful debts reservation has been made as per the year end 2007 (or 2006).
| Group | Parent | |||
|---|---|---|---|---|
| (TSEK) | 2007 | 2006 | 2007 | 2006 |
| Account payables | 10 772 | 1 785 | 6 999 | 1 785 |
Account payables are not interest bearing and normally fall due within 30 days.
| Group | Parent | |||
|---|---|---|---|---|
| (TSEK) | 2007 | 2006 | 2007 | 2006 |
| Personnel related liabilities | 877 | 255 | 442 | 255 |
| Other short term liabilities | 1 271 | 1 290 | 1319 | 1 290 |
| Total | 2 148 | 1 545 | 1 761 | 1 545 |
Other short-term liabilities are not interest bearing and normally fall due within one year.
| Duration 08-10-31, strikeprice 8.50 SEK | |||
|---|---|---|---|
| Holder | Number | Type | Issued by |
| Carl Ameln | 840,000 | Call option | IGE |
| Claes Levin | 750,000 | Call option | IGE |
| Bill Sundberg | 750,000 | Call option | IGE |
| Thomas Carlsson | 100,000 | Call option | IGE |
| Total | 2,440,000 | ||
| Duration 09-12-31, strikeprice 6.40 SEK | |||
| Holder | Number | Type | Issued by |
| Tomas Fellbom | 1,300,000 | Call option | IGE |
| Fredric Bratt | 500,000 | Call option | IGE |
| Lars Olof Nilsson | 750,000 | Call option | IGE |
| Total | 2,550,000 | ||
At the extraordinary general meeting on October 17th 2005, a resolution was made to issue one promissory note at a nominal value of SEK 100. 11,700,000 options, which gives the holder the right to subscribe for shares in International Gold Exploration IGE AB, were attached to the promissory note. The promissory note was issued to the Group subsidiary IGE Nordic AB (former Planet Mineral AB). 2,440,000 of these 11,700,000 options have been allocated. The exercise price of the option is 8.50. The holders of the options have the right to exercise the right during the period January 1st 2008 – October 31st 2008.
A new incentive program was resolved by the extraordinary general meeting (EGM) of June 13th 2007. The EGM
also decided to cancel the previously launched incentive program (described above). The incentive program included 6,000,000 options for the issue of shares in International Gold Exploration AB. The exercise price of the option is 6.40. 2,550,000 of these 6,000,000 options have so far been allocated. The holder of the option has, according to the resolution, the right to exercise the options during the period July 1st 2009 – December 31st 2009.
The holders of the share warrants have paid a price adjusted to the market according to the Black & Scholes option pricing formula. The market value of the warrants has been calculated based on the following assumptions;
| In data | Assumptions 2005 | Assumptions 2007 |
|---|---|---|
| Exercise price (SEK) | 8,5 | 6,40 |
| Estimated volatility (%) | 30 | 30 |
| Estimated duration (years) | 2-3 | 2,5 |
| Risk free rate (%) | 3 | 4 |
Total number of outstanding shares before full utilization of options amounted to 341,000,000 at the end of 2007.
In connection to the spin off of IGE Nordic, all options that have not yet been allocated have been transferred to the Parent Company, IGE.
Financial assets within the IGE Group mainly consist of account receivables, short term investments and cash. Financial debts are account payables. The Group's financial assets and debts are classified according to below table:
| (TSEK) | 2007 | 2006 | ||
|---|---|---|---|---|
| Market | Market | |||
| Group | Total | value | Total | value |
| Account receivables | 871 | 871 | 218 | 218 |
| Other receivables | 3 967 | 3 967 | 1 594 | 1 594 |
| Prepaid expenses and accrued income | 2 313 | 2 313 | 12 502 | 12 502 |
| Short term investments | 9 807 | 9 807 | 5 006 | 5 006 |
| Cash and cash equivalents | 127 827 | 127 827 | 136 674 | 136 674 |
| Account payables | 10 772 | 10 772 | 1 785 | 1 785 |
| Other liabilities | 2 148 | 2 148 | 1 545 | 1 545 |
| Accrued expenses and prepaid income | 5 880 | 5 880 | 2 012 | 2 012 |
| Parent Company | ||||
| Account receivables | - | - | 218 | 218 |
| Other receivables | 751 | 751 | 1 363 | 1 363 |
| Receivables related to subsidiaries | 91 583 | 91 583 | 18 959 | 18 959 |
| Prepaid expenses and accrued income | 385 | 385 | 12 494 | 12 494 |
| Short term investments | 9 807 | 9 807 | 5 006 | 5 006 |
| Cash and cash equivalents | 30 488 | 30 488 | 135 769 | 135 769 |
| Account payables | 6 999 | 6 999 | 1 785 | 1 785 |
| Other liabilities | 1 761 | 1 761 | 1 545 | 1 545 |
| Accrued expenses and prepaid income | 2 741 | 2 741 | 1 671 | 1 671 |
| Parent Company | ||
|---|---|---|
| (TSEK) | 2007 | 2006 |
| Disposal of assets to IGE Nordic AB | 40 155 | - |
| Purchase of assets of IGE Nordic AB | 6 850 | - |
| Purchase of assets of IGE Diamond AB (former Planet Mineral Holding AB) | 3 610 | - |
| Claim on IGE Nordic AB by year end | 5 321 | 450 |
| Claim on IGE Angola Ltd by year end | 63 134 | - |
| Claim on IGE Burundi SA by year end | 676 | - |
| Claim on Sebimu Ltd by year end | 22 001 | 14 899 |
| Claim on IGE Diamond AB by year end | 450 | 3 612 |
The undersigned assure that, to the best of our knowledge, the Annual Report is established according to the good accounting practice for the stock market companies, the handed information agrees with the existing situation and nothing of importance is left out that could influence the picture of the company created by the Annual Report.
This assurance does not mean that the Board and the Managing Director take responsibility in addition to the responsibility that is dictated by the Swedish Companies Act.
Stockholm 21/4 2008
Carl Ameln Chairman
Bill Sundberg Director
Ulrik Jansson Director
Lars Olof Nilsson Director
Claes Levin Director
Tomas Fellbom Chief Executive Officer
Our Audit Report was issued In Stockholm. April 21st 2008 Ernst & Young AB
Jaan Kubja Authorized auditor
To the Annual General Meeting of International Gold Exploration IGE AB (publ) Corporate Identity number -
We reviewed the Annual Report. Group Report (p 55-88) and the Board and CEO's administration of International Gold Exploration IGE AB (publ) for the year 2007. It is the Board and the Managing Director that are responsible for accounting records and the administration and that the Swedish Annual Accounts Act is applied when establishing the Annual Report and that the accounting standard IFRS, such as was adopted by the EU, as well as the Swedish Annual Accounts Act is applied when establishing the Group's Report. Our responsibility is to comment the Annual Report. Group Report and the administration based on our revision.
Th e revision was executed according to good auditing practice in Sweden. Th is means that we planned and executed the revision so as to a high, but not absolute certainty, assure us that the Annual Report and the Group Report have no essential incorrectness. A revision comprehends the review of a choice of data about amounts and other information about the accounting records. It is also a part of the revision to try the accounting principles and the Board and the CEO's application of those principles and the appraisal of signifi cant estimates that the Board and the Managing Director did when they established the Annual Report and the Group Report. As basis for our statement about discharge from liability we checked signifi cant decisions, measures and situations in the Company in order to be able to appraise if any of the Board members or the CEO is liable to pay compensation to the Company. We have also checked if one of the Board members or the CEO in any other way acted against the Swedish Companies Act. Annual Report Law or the Company laws. We consider that our revision gives us reasonable grounds for our statement bellow.
Th e Annual Report was established according to the Swedish Annual Accounts Act and gives a correct picture of the company's result and situation in accordance with the good accounting practice in Sweden. Group Report was established according to international accounting standards IFRS, such as was adopted by the EU and Swedish Annual Accounts Act and gives a correct picture of the Group's Income Statement and situation. Administration Report is compatible with the Annual Report and the Group Report's remaining parts.
We recommend the Annual General Meeting to appropriate the Income Statement and the Balance Sheet for the Parent Company, handle losses in Parent Company according to
the proposition in the Administration Report and that the Board of Directors and the Managing Director be discharged from liability for the fi nancial year.
Stockholm. April 21th 2008 Ernst & Young AB
Jaan Kubja Authorized Auditor
Carl Ameln Chairman of the Board Member since 2006 Born 1947 Carl Ameln holds a Master of Science from the Royal School of Mines. Stockholm. Ameln has extensive international experience from the mining industry. He started his career as Mining engineer for the LAMCO iron ore project in Liberia 1974.
As from 1975 until 2001 he worked for the Swedish iron ore company LKAB. After 3 years as a mining engineer in the worlds largest underground mine in Kiruna. he turned into marketing and sales in Singapore and Brussels for 12 years. In 1991 he Ameln was appointed CEO of LKAB, a position he held until late 2001. He also served as Director in the Board of Boliden Ltd 1997-2000. Shareholdings in the company: 100,000 Options in IGE: 1,000,000
Lars Olof Nilsson Director since 2007 Born: 1962 Nilsson holds a Bachelor of Science in Business and Administration from Umeå University. Nilsson has extensive international experience from business development and fi nancial questions. He currently serves as Director on the Board of BE Group AB (publ), IGE Nordic AB
(Publ) and Morphic Technologies AB (publ). He is also advisor to Nordic Capital, a group of private equity funds. He was Group treasurer from 1992 until 2004. In 2002 he assumed the responsibility for the group staff Business development until 2006. He served as Director of the Board of Boliden Ltd 1997-2000.
Shareholdings in the company: 0 Options in IGE: 750,000
Ulrik Jansson Director since 1989 Born: 1954 Ulrik Jansson President and CEO of PA Resources AB since 1996 and he is also director of the board of PA Resources AB since 1997. He holds a Bachelor of Laws from Uppsala University. Previous experience: Corporate lawyer in AGA AB
1985-1996 and Uddeholms AB 1982-1985, Board member of IGE Diamond AB. Other directorships: Chairman of the board of the PA Group's subsidiaries Microdrill AB, PA Resources Norway AS, Osbourne Resources Ltd, PA Resources Overseas Ltd, Hydrocarbures Tunisie Corp and Hydrocarbures Tunisie El Bibane Ltd. Shareholdings: 14,865,000 Options in IGE: 0
Bill Sundberg Director since 2004 Born: 1939 Holds a Master of Science in Mining from Th e Royal Institute of Technology in Stockholm (KTH). Has a large international network within the mining industry. Five years within Boliden AB including Mine Manager of the Näsliden mine. Has
worked for almost 30 years within the Atlas Copco Group where he served as Mining and Construction Manager in the Republic of South Africa, Managing Director in Th e Phillippines and Norway and as Division President for the Group's activities within the Mining- and Construction market.
Shareholdings in the company: 430 000. Options in IGE: 750 000
Claes Levin Director since 2004 Born: 1941 Levin holds a Bachelor of Laws form the University of Lund. He has former working experience from a various managing positions within SEB and has also been the managing director for Diligentia AB, the Reinhold-group and Platzer Bygg AB. Claes is
chairman of the board in Allokton Fastighets AB, Bröderna Falk AB, SH-Bygg AB, Want AB, Variant Fastighets AB and Wiking Mineral AB. He is a board member of First Baltic Property and West Siberian Resources AB. Shareholdings in the company: 398,000 Options in IGE: 750,000
Tomas Fellbom Chief executive offi cer (CEO) since 2007 Born: 1963 Fellbom has a Master degree of Business Administration from the Stockholm School of Economics. Tomas is currently the CEO of International Gold Exploration AB. Before he started at IGE, in September 2007, he worked
at the Swedish Trade Council within which he has served as the Vice President and head of the regions Southern Europe, Africa and the Middle East. In addition to the Trade Council, Tomas has among other things former work experience as the founder and the CEO of Spray Networks in France. Mr. Fellbom holds a dual citizenship of Sweden and France and lives in Stockholm and Paris. Shareholdings in the company: 200,000 Options in IGE: 1,300,000
Thomas Carlsson Chief fi nancial offi cer/controller (CFO) since 2006 Born: 1974 Th omas has a Master's degree in Finance from Stockholm University. He has been employed by IGE AB since 2006 and has experience from working with corporate fi nancing (public off erings as well as private placements),
listings, controlling auditing and fi nancial reports for listed companies. His former professional experience includes the positions as manager within ISS Facility Services, Fischer Partners FK AB (Corporate Finance) and Nordea. Carlsson is Swedish and resides in Stockholm, Sweden. Shareholdings in the company: 0 Options in IGE: 100,000
Valeria Gomez Economy and administration Born: 1976 Shareholdings in the company: 0 Options in IGE: 0
Leif Biureborgh Manager Angola Born 1939 Leif has lived in Angola for 30 years and has an extensive network among the Angolan government and infl uential citizens. His professional experiences includes for example; foreign correspondent with base in Paris. specializing in Angolan aff airs, executive
of the Swedish consultancy fi rm Anscan Development AB specializing in African and Asian aff airs, resident representative in Angola of the Swedish IT -Communications group Eiknes AB, resident representative in Angola of Turner Broadcasting - parent company of CNN, he served as the executive producer in Angola of the CNN World Report production of approximately 200 programs - in cooperation with TPA. Leif is is Swedish/Angolan and resides in Luanda, Angola.
Lucilia Coelho Chief Financial and Administrative Offi cer Born: 1957 Lucilia Coelho is a chartered accountant in Swedish book keeping. From 1983 to 1998, she was the Deputy Commercial attached of Swedish Foreign Aff airs mission in Angola. In 1998, the Swedish International Development
Authority appointed her the National Programme Offi cer for Gender, Environment, Hiv/Aids, Human Rights and Humanitarian Assistance in Angola. Before joining IGE Diamonds, Coelho has been cumulating for four years her function of National Programme Offi cer with the Financial and Administrative Offi cer function for the Swedish Foreign Aff airs mission in Angola. Lucilia is Angolan and resides in Luanda, Angola.
Joseph Okito Chief Operational and Investment Offi cer Born: 1968 Okito has 15 years of professional experience as the executive manager of gem and industrial diamonds purchasing companies. and alluvial diamonds exploration projects in Central Africa. He secured very high values of
diamond supply operations in DRC for Marjan Diamonds and successfully developed diamond mining investments by establishing strategic joint-ventures in Angola for Mac Diamond. Between 2000 and 2001, Okito was the President of the DRC Diamond Corporation.
He negotiated with the Congolese Government in favour of the discontinuation of the diamond monopole. Th e free diamond trading market reopened in May 2001. Besides his French business administration master degree, Joseph Okito received a special education from the London Imperial College in Mineral Projects appraisal, fi nance, valuation and funding options of junior mining companies. Joseph is Dutch and resides in Luanda/Paris, Angola/France.
Cedric Simonet Africa Region Manager Born: 1973 Cedric Simonet is a Doctor in Geology and a trained Lean 6 Sigma Black Belt. He is European Geologist number 739. He has been working in geology and management in the mineral industry for the last 10 years. His professional experience encompasses
a variety of minerals including gemstones, gold, fluorspar and bauxite. At Rockland Kenya Ltd. Cedric Simonet was general manager of the John Saul Ruby Mine. He worked several years with Alcan as mine manager and senior geologist of SOGEREM's fluorspar mines in France and as Black Belt at the Gardanne alumina refinery in France. He is a Director of Kilimapesa Gold (Pty) Ltd. He has lived more than 7 years in Kenya. Cedric Simonet is French and resides in Nairobi, Kenya.
Fredrik Swensson Manager – Special Projects, Kenya Born: 1968 Fredrik Swensson has lived in Africa for the last 12 years and has held management positions in several mining companies including Kagem Mining Ltd and Bridges Exploration Ltd. Fredrik Swensson has an exten-
sive experience of business in Eastern Africa and is also a specialist in security and EHS matters. He is a Director of Kilimapesa Gold (Pty) Ltd. Fredrik Swensson is Swedish and resides in Nairobi, Kenya.
Brian Lloyd Chief geologist IGE Africa (Kenya and Burundi) Born: 1947 Brian Lloyd holds a B.Sc. Degree in Geology from the University of London. He has extensive experience, mainly in Africa, of exploration for gold, diamonds, coloured gemstones, uranium, base and platinum group metals, and
industrial minerals. Over the last 28 years, he has occupied various positions as exploration and project geologist for several companies including Anglo American Corporation Ltd, Geosurvey GmbH, Samax Services Ltd, Goldstream Mining NL and MDN Northern Mining. Among other achievements, Brian Lloyd recently managed a grass root exploration program in the Tulawaka area of Tanzania that led to the discovery of three previously unknown gold deposits. In Guinea, he was also responsible for the discovery of significant uranium-cobalt-nickel mineralization, later subject to a 10 MUSD exploration programme by an international consortium. Brian Lloyd is British and resides in Nairobi, Kenya.
Laurent Wege Manager Burundi Born: 1973 (Burundi) Laurent Wege holds a B.Sc. Degree in Law from the University of Colorado. USA. He has experience in business management and is a seasoned politician on the Burundi scene as well as on the international scene. He is particularly active in
investment promotion for Burundi and represents the CNDD-FDD party in Scandinavia. His network extends in the Central Africa Region and in South Africa. Laurent is Burundian and resides in Bujumbura, Burundi.
Lucy Njeri Kamau Exploration Manager, Burundi operations Born: 1976 Lucy Kamau holds a B.Sc Degree in Geology from the University of Nairobi. She has experience in mining, exploration and surveying in Kenya, DRC, Rwanda and Burundi. She was geologist and open pit manager with Kenya
Fluorspar Co Ltd in Kenya. Her experience in exploration geology ranges from gemstones to gold and copper through industrial minerals. Lucy Kamau is Kenyan and resides in Bujumbura, Burundi.
Stephen Olang Exploration Manager, Kenya operations Born: 1966 Stephen Olang holds a B.Sc in Geology from the University of Nairobi. He is specialized in gold exploration in greenstone belts and has experience in Kenya, Ghana and Sudan. Stephen has worked with San Martin
Mining Co Ltd. Auvista and with IGE since 1998. Stephen is Kenyan and resides in Lolgorien, Kenya.
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International Gold Exploration IGE AB
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