Annual Report 2006 - Centamin€¦ · page 4 Centamin Egypt Limited Annual Report 2006 DRILLING RESULTS Amun Zone Drilling was initially focused in the Amun Zone, from 9900N – 10700N,

Annual Report 2006

Roger Speers (Senior Exploration Geologist) and Nagi Abdo Ibrahim (Driver) planning tracks in the Pharaoh Zone.

DirectorsMr Sami El-Raghy ChairmanMr Josef El-Raghy Managing Director/CEOMr Colin Cowden Non Executive DirectorMr G Brian Speechly Non Executive DirectorDr Thomas Elder Non Executive DirectorMr H Stuart Bottomley Non Executive Director

Company Secretary Finance ManagerMrs Heidi Brown Mr Mark Smith

Project Manager General Manager – EgyptMr Wayne Foote Mr Youssef El-Raghy

Senior Exploration Geologist Senior Mine Geologist – SukariMr Roger Speers Mr Richard Osman

Head Office Egypt Office57 Kishorn Road 361 El-Horia RoadMount Pleasant WA 6153 Sidi GaberAustralia Alexandria, EgyptTelephone: + 61 8 9316 2640 Telephone: + 203 5411 259Facsimile: + 61 8 9316 2650 Facsimile: + 203 5226 350Email: [email protected] Email: [email protected]: www.centamin.com

BankersAustralia EgyptNational Australia Bank Limited MISR International Bank50 St George’s Terrace 54 Elbatal Ahmed Abdel Aziz StreetPerth WA 6000 Cairo, Egypt

AuditorsAustralia EgyptDeloitte Touche Tohmatsu Mostafa Shawki & CoLevel 14, Woodside Plaza 78 Abdel Salam Aref St240 St Georges Terrace Borg El Salam - GlymPerth WA 6000 PO Box 360, Sidi Gaber, Alexandria 21411, Egypt

United Kingdom Nominated Broker & AdvisorEvolution Securities Limited100 Wood StreetLondon EC2V 7ANUnited Kingdom

Location of Registers of SecuritiesAustralia UnitedKingdomAdvanced Share Registry Services Computershare Investor Services110 Stirling Highway PO Box 82 The Pavilions, Bridgwater RoadNedlands WA 6909 Bristol BS99 7NH England Telephone: + 61 8 9389 8033 Telephone: + 44 0870 702 0003Facsimile: + 61 8 9389 7871 Facsimile: + 44 0870 703 6116

Stock ExchangesThe Company is listed on the Australian Stock Exchange and the Alternative Investment Market of the London Stock Exchange. The Home Exchange is Perth.

Chairman’s Report 1

Review of Operations 3

Directors Report 18

Auditor’s Independence Declaration 29

Corporate Governance Statement 30

Independent Audit Report 34

Directors Declaration 36

Income Statement 37

Balance Sheet 38

Statement of Changes in Equity 39

Cash Flow Statement 40

Notes to the Financial Statements 41

Additional ASX Information 67

Centamin Egypt Limited ❚ Annual Report 2006

Contents Company Particulars

CENTAMIN EGYPT LIMITEDABN 86 007 700 352

Chairman’s Report

Dear Shareholders

It is my pleasure to present to you the annual report of the Company for the year ended 30 June 2006.

What a difference a year makes! This time last year I was pleased to announce that “we are fi nally back doing what we do best” and what a year it has been. On the 12th May 2005 we recommenced drilling at Sukari and at that time the reported mineral resource estimate for the project was 2.94 million ounces of gold. As announced just recently, the current mineral resource estimate now contains 6.79 million ounces of gold, an increase of 3.85 million ounces or of 131% in just over one year and we are still drilling.

There are currently nine drill rigs drilling on site being operated primarily by Egyptian drillers, under the supervision of the drilling contractor. This is a tremendous advancement to have a core of experienced local drillers that will ensure long term benefi ts for both the Company and the drillers themselves.

Great progress has also been made with infrastructure at the Sukari camp, with construction of more accommodation and staff facilities including cafeteria and social amenities. Construction is being carried out by the Company’s staff, using local materials and is aesthetically in keeping with traditional Egyptian architecture. Because of their participation in the construction, the workers are very proud of their camp and take great care in the maintenance of the facilities.

The feasibility study to a bankable standard for the development of a 4 million tonne per annum processing plant continued during the year, albeit at a pace that has been frustrating. Unfortunately resource projects in the current climate are experiencing strong demand for professional technical services and capital items, which in turn is resulting in signifi cant escalation of project time lines and costs.

As such the Company is considering the purchase of used process plant items in an effort to reduce both the procurement time and the cost. We have identifi ed a recently closed operation that contains most of the process plant items that your Company will require for the Sukari project. The potential purchase of this plant represents an opportunity to materially reduce the cost of development and also accelerate the construction timetable. Testing of the structural integrity of key plant items has been completed and negotiations with the plant owner are at an advanced stage. By necessity, the completion of the study will be delayed whilst a thorough review of this process plant is carried out.

Core yard in the foreground with Sukari camp at rear

Managing Director/CEO, Josef El-Raghy with His Excellency, Engineer Sameh Fahmy, Minister for Petroleum and Mineral Resources

page 1

I am pleased to say that your Company has enjoyed marvellous support from the Minister for Petroleum and Mineral Resources, His Excellency Sameh Fahmy and the staff at the Ministry. The Minister and his entourage visited Sukari twice during the past year, resulting in tremendous media coverage throughout Egypt which inturn has sparked greater interest in and awareness of Sukari. A delegation from the Ministry also visited Western Australia for meetings with the Department of Industry and Resources and included a visit to Kalgoorlie.

During the year, His Excellency, The Minister also presented awards on behalf of the Egyptian Government to the Company’s wholly owned subsidiary, Pharaoh Gold Mines NL and one of its Egyptian geologists, Mr Ismail Abd El-Khalek, acknowledging the Company’s and Mr Abd El-Khalek’s contribution and commitment to the Egyptian minerals industry.

The Australian Ambassador to Egypt, Mr Robert Bowker also visited the Sukari site as part of the Company’s policy of keeping the Australian Embassy informed with respect to the Company’s progress and activities in Egypt.

In November, the shareholders AGM was held in London for the fi rst time, with a very strong attendance, refl ecting the signifi cant level of investment in the Company by UK and European investors. This participation was further strengthened in March with the successful placement of 75 million shares to mainly UK institutional investors, raising £20.6 million (A$50.4 million), to assist with the development of the Sukari project.

In September, Mr Stuart Bottomley was appointment to the board. Stuart resides in the UK and has in excess of twenty years experience in funds management and for the last fi fteen years he has acted as a consultant to a number of private and public companies with a growing emphasis on the mining industry.

In closing I also acknowledge the contribution of our staff in Australia and Egypt for their loyalty and dedication throughout the past year and my co-directors for their efforts.

I look forward to welcoming you to the Annual General Meeting of the Company.

On behalf of the Board

Sami El-RaghyChairman

Chairman’s Report

The polished surface of gold is

similar to the brilliance of the sun.

Gold, for Egyptians, represented a real-life

manifestation of their beliefs, and was

called ‘the fl esh of the gods’.

Diamond drilling

page 2 ❚ Centamin Egypt Limited ❚ Annual Report 2006

Review of Operations

RESOURCE ESTIMATION

Drilling at the Sukari Project site continued during the 2006 fi nancial year after resumption of work on site in May 2005. Since re-starting fi eld work, a total of 75,600m of drilling in 316 holes has been completed, of which 26,000m is RC. A total of 9 drill rigs are on site, building up from 5 initially being used.

The mineral resource estimate has grown to 142.96 Mt @ 1.48 g/t Au for 6.79 Moz Au using a 0.5g/t Au cut-off grade. The work since resumption of exploration activities has doubled the resource base at Sukari. This has primarily been due to the signifi cant increase in total drill metres obtained during the year, in effect, doubling the amount of drilling achieved in the fi rst six years of the project.

Cut-off Measured Indicated Inferred Total Total

g/t Au Mt g/t Mt g/t Mt g/t Mt g/t Moz

0.50 36.06 1.45 54.63 1.50 52.30 1.50 142.96 1.48 6.79

0.70 27.24 1.73 41.77 1.78 37.3 1.80 106.34 1.78 6.09

1.00 18.42 2.15 28.64 2.21 24.40 2.40 71.47 2.24 5.15

The mineral resources are estimates of tonnes and grades that are anticipated to be recovered by open pit mining and are based on Multiple Indicator Kriging with block support correction. In general Measured resources lie in areas where drilling is available at a nominal 25 x 25 metre spacing, Indicated resources occur in areas drilled at approximately 25 x 50 metre spacing and Inferred resources exist in areas of broader spaced drilling.

The resource estimate has been based on the sampling and geological logging coming from 647 diamond and RC drill holes combining to give approximately 130,000 metres. All assaying available at 21 July 2006 is included for the latest estimate. The resource data set comprises approximately 66,400 two-metre down hole composites and rock chip samples. The mineral resource estimates have been adjusted to present land surfaces and previous underground mining. Appropriate check sampling and assaying have been undertaken to verify the gold assays used in the resource estimation.

Figure 1 – Sukari Hill with project Zones on IKONOS Satellite Image

page 3


DRILLING RESULTS

Amun Zone

Drilling was initially focused in the Amun Zone, from 9900N – 10700N, the open pit area of the Bankable Feasibility Study (BFS) (Figure 2). The aims of the drilling were:

❚ Convert as many Inferred resources lying inside the estimated pit shells as possible to Indicated and Measured, thereby maximising resource ounces for BFS, reserve calculations and detailed mine design work, as well as improving geological understanding and the 3D model.

❚ Maximise pit shells on geological information and not have pit shells bottoming on a lack of drill data.

❚ Infi ll identifi ed gaps in the resource model, particularly at the footwall contact in areas where it starts to fl atten and may be potential “Hapi Shoot” style high grades, as well as test hangingwall porphyry units which are variably mineralised but poorly tested, particularly around 10 500N.

❚ Defi ne extent and geology of mineralised porphyry to the south and at depth, close off if possible to south for infrastructure requirements and mine planning.

The Sukari orebody is a variably altered granodioritic intrusion hosted in a complex mafi c and intermediate volcano-sedimentary package, with late crosscutting andesite and dacitic dykes. The porphyry outcrop is expressed as a 2500 m long ridge rising to 350 m above the local wadi level. The texture of the rock appears porphyritic in areas and equigranular in others due to the effects of the overprinting alteration; hence the orebody has been termed the Sukari Porphyry.

The hangingwall is a sheared mafi c to intermediate package of volcaniclastic sediments and effusive lavas. The stratigraphy has been simplifi ed into three rock types: Serpentinites, lapilli tuffs, and sediments. Listwaenite is a barren silica – carbonate (ankerite-siderite) alteration of the serpentinites.

The footwall contact is typically a knife edge, structural contact to the strongly sheared, black, fi ne grained, graphitic schist unit, with serpentinites and tuffs also occurring in the footwall. Dacitic dykes are commonly intruded near the footwall contact, utilising the zone of weakness caused by the intense shearing and alteration.

Around 10400N a red, hematitic alteration of the normally grey-green P1 porphyry occurs, termed P6 in the logging codes. North of 10550N the P6 alteration has fl ooded the rock and may be introduced with a northeast trending fault at around 10650N.

The porphyry contains 99% of the known gold mineralisation which is hosted in through-going shears, breccia zones and quartz veins. The host sequence contains less than 1% of the bulk gold reserves, hosted in shears and along host-porphyry contact zones.


Figure 2 – The Sukari porphyry outcrop with Zones

page 5

Gold mineralisation in the main Sukari porphyry is associated with moderate (40 – 60o) east dipping quartz vein, breccia - shear zones, haloes of stacked extensional quartz veins and silica-sericite-ankerite-sulphide-kaolin alteration (Figure 4). Higher grades are associated with strongly sulphidic (particularly arsenopyrite), hydrothermal brecciated zones, shear zones and milky quartz veins. Fine grained visible gold is rare, but occurs usually in milky quartz veins or breccia zones, usually with sulphide (Figures 3 & 4).

Higher gold grades sometimes occur at the footwall contact zone (Holes 169, 173 and 523, Figure 5). Mineralisation is also concentrated in zones of shearing, quartz fl ooding brecciation and quartz veining at the hangingwall contact. The porphyry at the contact in these higher grade zones is strongly sericite-silica-altered, kaolinitic in places, quartz and sulphide vein-rich and shows strong disseminated pyrite development and pyrite-arsenopyrite in quartz veins and at vein selvedges. The geology of the Amun Zone in the south shows a considerable curving and fl attening of the FW contact, possibly creating a stronger zone of dilation, and hence enhanced gold grades.

The mineralisation and porphyry is still open at depth and to the north of the proposed mining operations, and although appears to steepen and narrow in the south, hasn’t conclusively been closed off. The drilling successfully achieved the stated aims and produced many outstanding assay intersections.

Subsequent to satisfying the aims of increasing the size and confi dence of the Amun Zone mine area and BFS resource, drilling progressed northward in a systematic fashion, into the Ra, Gazelle Zones and then the northern Pharaoh Zone.

Ra Zone

The aim of the Ra Zone drilling was to confi rm continuity of the Sukari mineralised system to the north of the Amun Zone, outline inferred resources for further detailed delineation and start opening up the northern parts of the Sukari Hill (Pharaoh Zone) for systematic evaluation. The Ra zone from 10700N to 11200N has been infi ll drilled on 50m spaced sections, in some areas to 25m. Results show continuity of mineralisation through the northern part of the Amun zone, into the Ra Zone and onwards into the Pharaoh Zone, and is extremely encouraging for resource base expansion, future infi ll drill testing and resource modelling.


“In Egypt, gold is as plentiful as dust”

– Ancient Egyptian saying

Figure 3 - Photograph displays visible gold in D395 at 352m – 353m downhole, the assay for the metre was recorded as 573g/t

Figure 4 - Brecciated and veined P1 porphyry. The breccia fragments are rimmed by arsenopyrite and galena (blue arrow). Native gold occurs along the vein/breccia boundary (black arrow, inset), SHDDH184


The Ra Zone is characterised by the presence of large volumes of the red, porphyritic, hematitic altered P6 porphyry unit, as well as the Amun Zone type Main Porphyry P1. Geological and assay data shows mineralisation continuing strongly along strike to the north, mainly confi ned to the eastern half of the hill as accessible now, where the P1 type of porphyry predominates. Mineralisation zones are controlled by a series of sheeted, moderate (30 – 50o) east and west dipping structures, related to extensional quartz veining and alteration of the porphyry, with sericite, silica, kaolinite, ankerite and pyrite the main alteration minerals.

Drill hole declinations were designed to be steep to effectively target these conjugate structures. Zones of stockwork mineralisation and alteration occur where the two structures intersect. Several signifi cant results were returned from the drilling in the this zone, including 111m @ 15.06g/t Au from 473m in RCD553 on 11075N (Figure 6).


Figure 5 – Schematic Cross Section 10400N, Main Geological Features, Amun Zone, Sukari Gold Mine

Anter Abd El Kareem Ahmed (Driver) with the Pharaoh Zone in the background

page 7


Figure 6 – Schematic Geological Section 11075N, Ra-Gazelle Zone, high grade zone in RCD553

Figure 7 – Schematic Geological Section 11700N, Pharaoh Zone

Pharaoh Zone Drilling

Drilling is currently underway in the Pharaoh Zone, following up strong indications of mineralisation from previous mapping, rock chip sampling and drilling. The aim of drilling is to defi ne mineralisation continuity north to the end of the Sukari Hill, initially on 50m spaced sections, to an inferred resource category and for preliminary economic studies. Assay results are encouraging as they indicate economic gold values near surface. These correspond well with Au anomalous rock chip samples taken in early 2005 and the previously mapped quartz vein-shear-alteration zone striking grid north from about 11500N to the northern margin of the porphyry hill at 12200N.



RCD471 on 11600N, near the start of the surface mapped strong quartz veining and alteration zone, returned a strongly mineralised intersection from surface of 12m @ 1.86g/t Au, characterised by silica-sericite-kaolinite altered and weathered P1, extensive quartz veining and weathered sulphide. The hole is weakly mineralised all the way down to 68m, with signifi cant zones of 7m @ 1.22g/t Au from 38-45m and 9m @ 2.25g/t Au from 57 – 66m (incl. 2m @ 6.52g/t Au from 59m).

RCD469, 479 and 480 have been drilled from Pharaoh Track at 11700N (Figure 7). The RCD469 RC pre-collar recorded 16m @ 1.15g/t Au from 29m (incl. 4m @ 2.86g/t from 41m). RCD479 is also mineralised from surface, with an assay intersection of 11m @ 1.97g/t Au. Interpretation indicates a signifi cant west dipping structure, as well as the more common east dipping veins. Holes 467, 477, and 478 have been drilled on the Pharaoh and Dozer tracks on 11800N. All have recorded signifi cant gold assays in the near surface environment.

Current drilling and results on Adit, Accra, Mike and Lower Mike Tracks strongly suggests the near surface mineralisation extends south to around 11200N and north to 12100N, and is up to 100m wide in places where there is adequate drill coverage.

Rockbreaker Access Tracks

Up to fi ve rockbreakers were used to cut drilling access tracks on the eastern fl ank of Sukari Hill (Figure 8) from 11000N to 12200N in the Ra and Pharaoh Zones, as well as initially in the Amun Zone to allow drill rig access. Work is now commencing on the northern and western parts of the hill to increase drill coverage in important areas for resource expansion.

Figure 8 – Rockbreaker Track Progress to date

page 9


Ausenco

❚ Metallurgical testwork

❚ Process design

❚ Plant design

❚ Sea water supply pipeline and pumping station

❚ Site and camp power generation

❚ Site offi ces and services

❚ Processing operating and capital costs

❚ Infrastructure capital costs

❚ Implementation plan

Australian Mining Consultants (AMC)

❚ Open pit optimization

❚ Mine design

❚ Mine schedules

❚ Equipment selection

❚ Mining operating and capital costs

Hellman and Schofi eld (H&S)

❚ Ore body model generation

❚ Grade control requirements

George Orr and Associates

❚ Open pit geotechnical design

Knight Piesold

❚ Tails dam geotechnical study

❚ Tails dam design

❚ Ore, low grade and waste geochemical assessment

❚ Plant site geotechnical study

Environics

❚ Environmental impact assessment

❚ Chemicals management requirements

❚ Heavy fuel oil supply reliability

Amun Zone

Bankable Feasibility Study (BFS)

A number of consulting and engineering companies were appointed to undertake components of the study as listed below.



Processing Route Selection / Metallurgy

Following an update of a Scoping Study conducted in 2003 two process route options were selected for further review and metallurgical testwork to determine the optimal process route confi guration for Sukari ore.

Sukari ore is hard and abrasive with the majority of gold contained as fi ne particles associated with sulphides (predominantly pyrite and minor arsenopyrite in a ratio of approximately 80:20). A fi ne grind is required to liberate gold particles for leaching in a cyanide solution.

Extensive metallurgical testwork was completed under Ausenco’s supervision. A total of 2,487 kg was used for metallurgical testwork. Initially, 1,847kg of samples were dispatched to Perth and tested at Independent Metallurgical Laboratories (IML). The sample sets represented ore material types expected to be milled over the project life and included variability samples for process optimisation. Samples of ore with variably weathered sulphides and samples of high grade, kaolinised ore were assessed for process route studies.

Two process routes assessed were:-

1. Whole of ore CIL 2. Flotation to produce a sulphide concentrate with regrind and leach of the concentrate with/without leach of the fl otation

tailings

The IML testwork program showed that a process route including fl otation of a sulphide concentrate, with or without a CIL leach phase on the fl otation tailings, resulted in a better gold recovery than whole of ore CIL leach. Gold recovery when using a fl oat tails leach phase averaged 87-88% across all ore types.

Re-logging of diamond drilling on 50m sections between 9900 and 11200N commenced in March and in parallel additional testwork commenced to correlate sulphide mineralisation oxidation state with testwork results. A further 640kg of metallurgical samples were dispatched to Perth with test work undertaken at the AMMTEC laboratory.

Samples have also been taken for Mine Scheduling variability work, particularly the early mined weathered porphyry material. Re-logging of holes on 50m sections from 9900N to 11200N was completed for weathered sulphide concentrations for metallurgical recovery characteristics, as recommended by Ausenco.

Metallurgical testwork indicated a very high recovery of gold to concentrate for primary ore through fl otation rather than whole of ore CIL and at lower operating and capital costs. As such this process route was selected as the preferred process for Sukari ore. Subsequent testwork showed that a 12 hour leach of fl otation tailings was economic where sulphides were oxidized and hence fl otation inhibited. The fi nal process design included fl oat tails leach at 150µm for selected ore types where partial or full oxidation of sulphides had occurred.

All planned metallurgical testwork has been completed. The process to re-log core and undertake metallurgical testwork (inclusive of variability testing) delayed the BFS through the second half of the fi nancial year but was completed just prior to year end. This process had a very positive outcome with recoveries being improved signifi cantly from 80-82% to 87-88%.

“Gold, substance of the Gods”

Australian Ambassador to Egypt, Robert Bowker and Senior Mine Geologist, Richard Osman

page 11


Mining Study

Hellman and Schofi eld completed three ore body models for mine design. The models were each done using H&S proprietary software, GS3, to produce a multiple indicator kriged resource with 25 x 20 x 5 meter (north, south, RL) panels. From March the orebody models used in BFS planning had a new category included to model the degree of oxidation of sulphide minerals to enable metallurgical recovery to be assigned to ore blocks.

Density and compressive strength samples were collected for geotechnical analysis. A program of nine test pits and twenty nine drill holes were completed for geotechnical assessment of the footwall and hangingwall rock units. The geological structure at Sukari is complex with rocks displaying well developed shearing, faulting, folding and jointing. Hangingwall rock units were described as moderately strong to very strong whilst the footwall comprises moderately strong to strong rocks. For the purposes of geotechnical design for the open pit walls, the pit area has been divided into two domains. The north, east and southern walls (domain 1) have been designed with ten meter high batters at 80°with 5 meter berms. Every 50 meters vertically a ten meter safety berm will be left. The western wall (domain 2) has been designed with ten meter batters at 80° with a ten meter berm. Every 60 meters vertically a 16 meter safety berm will be left. Due to the better geotechnical quality of the east wall the ramp design will be contained within this wall.

The mining study being carried out by AMC has indicated an open pit mining operation is capable of producing 4mtpa of ore for the Sukari plant through the development of three pit stages. The pit stage designs and life of mine schedules have confi rmed the mine is capable of producing feed for the plant for in excess of a ten year mine life at a consistent 4mtpa.

Optimisation work undertaken showed that the development of the open pit with owner operated earthmoving fl eet rather than contract mining gave the lowest development costs. Due to the long mine life already evident from resource drilling to date and the potential for increased mine life through further resource drilling it is planned to purchase an owner operated fl eet from the commencement of bulk earthmoving operations.

Bulk earthmoving will require a fl eet of up to four 250 tonne class excavators matched to 150 tonne class dump trucks with associated ancillary fl eet. Total material movement will average 41 million tonnes per annum for the fi rst fi ve years.

A pioneering phase utilizing contractors for mining may be required to develop pit benches for the bulk earthmoving fl eet and to develop suitable haul ramps to the top of the Sukari hill.

Life of mine schedules and various mining strategies have been assessed and reviewed with each revision in ore body model. Further work is required to assess the potential for incorporating the signifi cant proportions of marginal grade material produced over the life of the project in to the milling schedule.

Growth In Resources Ounces (>0.50g/t Cut Off)

0

7,000,000

Apr-97 Nov-00 Jan-01 Jul-01 Jan-02 Jul-02

Date

Au O

unce

s

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

Feb-03 Mar-03 Dec-05 Apr-06 Jul-06


Tailings Dam and Environmental Study

Knight Piesold undertook a number of studies related to tailings dam location and design, plant geotechnical assessment, tailings and waste geochemical characteristics and surface water management.

Two tailings dam locations were considered and an area located in a natural, confi ned catchment to the south east of the operation was selected for geotechnical assessment and design. Four vertical HQ diamond drill holes to 20-30m and one angled hole to 50m were drilled at the tailings dam location. Fourteen packer tests were done to measure permeability. Forty two test pits were excavated with a 20 tonne hydraulic excavator. The test pit depths varied across the dam fl oor and were limited to the depth the excavator could penetrate the basin rock. The permeability tests show the dam basin to have a variable permeability, insuffi ciently low to enable tailings to be discharged directly without an additional drainage barrier being installed.

Environics, an Egyptian environmental consultancy group, undertook several studies including:-

• A review of the supply stability for heavy fuel oil for site power generation;• A review of chemicals management issues inclusive of process chemicals and explosives;• A review of the management of matters relating to historical artefacts; and• Environmental Impact Assessment.

No signifi cant issues have been highlighted by these studies.

Environics commenced the environmental impact assessment but the process as been delayed whilst metallurgical process route assessment and revisions to the mining plan were conducted.

Process Plant Design and Construction

As the metallurgical and process fl ow sheet elements of the BFS have been completed, this has allowed the Company to search for appropriate items of used process plant.

The company is considering the purchase of used process plant items in an effort to reduce both the procurement time and the cost. The search has identifi ed a recently closed operation that contains most of the process plant items that Centamin will require for the Sukari project.

The potential purchase of this plant represents an opportunity to materially reduce the cost of development and also accelerate the construction timetable. Testing of the structural integrity of key plant items has been completed and negotiations with the plant owner are at an advanced stage.

By necessity, the completion of the Feasibility Study will be delayed whilst a thorough review of the impact of the potential purchase of this process plant on capital and operating costs is carried out.


Hamdy Tohamy (Geologist), Ahmed Sultan (Geologist), Samir Abdel Aziz (Finance Manager, Egypt), Abd El-Haleem Hafez (Senior Geologist), Josef El-Raghy (Managing Director/CEO) and Mohamed Farghally (Senior Geologist)

“During the earliest periods of

Egyptian history, only kings were

allowed to wear gold.”

page 13

Regional Exploration

Although the resource drill out and investigation of Sukari Hill took priority, near mine exploration and prospecting work was carried out during the year. Work involved data compilation, rock chip sampling and mapping. Several samples returned economic assay results, including the Student Prospect, an outcropping quartz vein in sheared and altered country rock a few hundred metres to the north of Sukari Hill (Figure 9). The immediate footwall schist to the quartz vein returned a 1.2m channel sample assay of 2.79g/t Au.

Samples were also taken from several geotechnical pits and outcrop at the planned infrastructure sites, and some sampling in a nearby wadi area of the proposed tailings storage facility (TSF). No signifi cant values were returned.

A more detailed regional exploration program will be developed in the future when the Sukari Mine detailed resource defi nition permits. The Company realises the importance of maintaining a steady “pipeline” of regional and near mine prospects to identify additional gold resources for the Project area.


Figure 9 – Near Mine Exploration Sampling 2005 - 2006



Signifi cant Assay Results

Hole Northing Easting Azimuth Dip Length From To Interval Grade

D338A 10454 10506 270 -70 254.92 131 136 5 14.76

D340 10299 10620 274 -56 301 186 205 19 5.85D346 10372 10720 262 -69 351 295 322 27 3.40

incl. 307 312 5 11.59D351 10727 10590 270 -80 443.5 422 423 1 65.60RCD359 10499 10761 271 -76 479.3 356 428 72 2.65

423 424 1 43.90D360 10625 10608 266 -74 388.1 209 377 168 2.55

incl. 328 333 5 10.13RCD362 10585 10630 270 -65 385.4 226 362 136 2.58

incl. 276 280 4 11.23incl. 345 347 2 28.54

D363 10871 10585 260 -70 349 289 299 10 6.39RCD366 10547 10577 277 -70 317.6 139 151 12 3.82

206 245 39 2.65RCD367 10826 10542 277 -80 382.5 230 303 73 2.65

incl. 265 274 9 7.17incl. 279 292 13 5.54

RCD370 10023 10518 270 -88 302.9 149.5 224 74.5 4.63

D371 10851 10428 270 -90 110.82 34 39 5 5.57RCD388 10301 10644 270 -81 349.7 244 274 30 3.65

incl. 265 268 3 20.78294 318 24 9.70

incl. 295 296 1 185.00incl. 294 303 9 23.78

RCD391 10604 10832 270 -65 480.9 381 395 14 3.93401 436 35 4.21

D395 10750 10807 270 -55 480 352 353 1 573.00RCD402 10684 10858 270 -57 552 450 458 8 9.09

492 496 4 14.02RCD406 10373 10450 270 -60 160 63 69 6 5.07

105 146 41 3.69DGT408 10255 10429 270 -60 296.6 92 118 26 4.23

246 248 2 13.55D410 10871 10680 270 -75 528.1 104 110 6 3.91

128 129 1 21.60325 397 72 2.30443 450 7 5.78

RC413 10348 10438 270 -62 150 94 99 5 19.21RC415 10300 10445 270 -60 150 95 105 10 3.64

112 129 17 2.56RCD416 10000 10523 270 -83 306.6 212 235 23 6.92

incl. 217 228 11 12.53243 248 5 3.97

RCD420 11077 10801 270 -87 387 283 321 38 2.62

RCD421 11125 10769 270 -88 431.1 305 315 10 3.54

RCD431 11084 10916 270 -88 237 175 179 4 4.18

RCD437 11170 10766 270 -88 365.1 299 365.1 66.1 2.18

RCD440 11125 10964 270 -70 296 123 147 24 2.03RCD441 11179 10961 270 -70 306.9 138 146 8 6.80

incl. 144 145 1 38.50D455 11023 10852 270 -60 300.84 226 300.84 74.84 2.42

page 15

Hole Northing Easting Azimuth Dip Length From To Interval Grade

D456 11076 10798 270 -65 324.47 251 270 19 2.04RCD458 10980 10638 270 -87 595 415 439 24 2.61

472 548 76 1.96RCD461 11027 10657 270 -87 647.4 478 571 75 1.91

incl. 519 520 1 49.80RCD467 11800 10915 270 -65 268.00 50 76 26 1.66

incl. 67 69 2 6.71RCD469 11700 10796 270 -87 264.80 16 24 8 1.12

29 45 16 1.15RCD471 11600 10690 270 -87 386.8 0 12 12 1.86

57 66 9 2.25RCD477 11817 10825 270 -87 278.4 92 97 5 1.77

119 130 11 1.25RCD478 11817 10824 270 -67 368 4 27 23 1.30

incl. 15 16 1 7.68RCD479 11700 10760 270 -87 380 0 11 11 1.97

59 101 42 1.26RCD480 11700 10760 270 -65 320 26 30 4 2.48

38 85 47 0.87RCD492 10003 10521 270 -75 271.1 181 198 18 8.80

incl. 188 193 5 21.57RCD497 10079 10594 270 -83 380.00 206 244 38 3.57

incl. 227 244 17 5.79incl. 233 237 4 13.70

263 284 21 2.50RCD498 10099 10542 270 -75 308.3 198 278 80 2.30RCD499 9990 10553 270 -89 371.30 279 319 40 2.86

incl. 287 288 1 12.20incl. 292 298 6 8.09incl. 301 302 1 8.27

RCD500 10149 10556 270 -63 277.6 65 121 56 2.03RCD502 10202 10557 270 -63 348.1 108 146 38 6.86

incl. 108 117 9 19.61incl. 137 140 3 8.09

RCD508 10451 10636 270 -70 341.70 215 275 60 2.40RCD509 10504 10608 270 -84 384.5 295 329 34 3.08RCD513 10787 10750 270 -70 481.8 391 396 5 10.13

409 441 32 1.91RCD522 10480 10756 270 -70 449.6 336 360.6 24.6 4.90

incl. 342 350 8 12.04RCD523 10400 10696 270 -76 384.9 266 272 6 5.09

incl. 269 270 1 15.1313 322 9 4.07

incl. 314.4 315 0.6 26.3RCD524 10795 10553 270 -63 284.8 131 176 45 3.26RCD525 10800 10687 270 -72 455.5 233 251 18 3.07

264 313 49 1.51319 347 28 2.02

RCD526 10778 10684 270 -67 452.8 326 388 62 2.01RCD536 11647 10727 270 -73 312.20 0 26 26 1.65D543 11085 10912 270 -10 112.72 26 46 20 1.86RCD553 11079 10914 270 -72 614.4 473 584 111 15.06

incl. 572 575 3 440.6RCD569 11303 10884 270 -87 437.7 303 347 44 2.26RCD570 11352 10782 270 -87 150 9 20 11 2.66RCD578 11449 10718 270 -89 136 65 81 16 1.76

Intersections based on Composite and Single Sample cut off grade of 0.5g/t; Max Internal Waste 3m.




Notes:

1. Pharaoh Gold Mines NL (a wholly owned subsidiary of Centamin Egypt Limited) is the holder of a Mining (Exploitation) Lease

covering an area of 160 km2 that contains the proposed Sukari mine site and surrounding prospects. This lease is issued under the

existing Law 222 of 1994, which was enacted by the Egyptian Government specifi cally to accommodate the Company’s exploration

and mining activities in the Eastern Desert (the Eastern Desert Concession). The Lease has a tenure of thirty years with the option

to renew for a further thirty years.

2. An Egyptian mineral concession held under application by Egyptian Pharaoh Investment (EPI) an Egyptian Company jointly owned

by Centamin Egypt Limited and Kara Gold NL under an agreement with the Egyptian Government. Under the terms of this agreement

to develop a heavy minerals project at Rosetta on the Mediterranean coast, east of Alexandria, any profi t from mining and separation

of the heavy minerals will be shared with the Egyptian Government after EPI recoups all of its development expense. Any profi t from

the upgrading of the ilmenite to pigment quality TiO2 (titanium dioxide) will be 100% EPI.

AUSTRALIAN PROJECTS

Nelson’s Fleet

The Company is entitled to a royalty over the Nelson’s Fleet gold project near St Ives, Western Australia, from the St Ives Gold Mining Co Pty Ltd, a subsidiary of Gold Fields Ltd. The Company has not been informed of any mining of the tenement to date.

Semior Geologists Baha Adel Sadek and Abd El-Haleem Hafez logging core

Information in this report which relates to exploration, geology, sampling and drilling is based on information compiled by Mr R Osman who is a member of the Australasian Institute of Mining and Metallurgy with more than fi ve years experience in the fi elds of activity being reported on and is an employee of the Company. His written consent has been received by the Company for this information to be included in this report in the form and context that it appears. Mr Osman declares an interest in shares/options of the Company.

The information in this report that relates to mineral resources is based on work completed by Mr Nicolas Johnson, who is a Member of the Australian Institute of Geoscientists. Mr Johnson is a full time employee of Hellman and Schofi eld Pty Ltd and has suffi cient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defi ned in the 2004 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Johnson consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

For this report, measured resources lie in areas where drilling is available at nominal 25 x 25 metre spacing, indicated resources in areas drilled at approximately 25 x 50 metre spacing and inferred resources in areas of broader spaced drilling. The resource model extends to 750mRL (approximately 400 metres below surface) and resources are estimates of recoverable tonnes and grades using Multiple Indicator Kriging with block support correction.

Appropriate check sampling has been undertaken to verify the gold assays used in this estimate.

page 17

Corporate Activities

During July 2005, His Excellency Engineer Sameh Fahmy, the Minister for Petroleum and Mineral Resources, the Deputy Minister, Engineer Amghad Ghonem, and the entire Egyptian Mineral Resource Authority (“EMRA”) Board, together with a large media entourage visited the Sukari Project site where the Minister stated on national television that the project had his, and the Egyptian Government’s full support.

During September 2005, a delegation from EMRA and the Ministry for Petroleum and Mineral Resources attended a mining conference in Perth, visited the super pit in Kalgoorlie and met with the representatives of the Department of Industry and Resources of Western Australia in an effort to gather information to assist in the preparation of the new mining legislation in Egypt.

On 26 September 2005, Mr Stuart Bottomley was appointed as a director of the Company.

In preparation for the development of the Sukari Project, Wayne Foote was appointed as the Project Manager in October 2005.

In November 2005, the Annual General Meeting of shareholders was held in London for the fi rst time with a very strong attendance, refl ecting the signifi cant ownership by UK and European investors. Based on this success it is intended to hold future meetings in the UK.

Also in November 2005, the Company’s fully owned subsidiary, Pharaoh Gold Mines NL (“PGM”) and one of its Egyptian geologists, Mr Ismail Abd El-Khalek, were honoured with awards for outstanding performance during 2005. These awards were presented by His Excellency, Engineer Sameh Fahmy, the Minister for Petroleum and Mineral Resources, on behalf of the Egyptian Government, acknowledging the Company’s and Mr El-Khalek’s contribution and commitment to the Egyptian minerals industry.

During December 2005, the Australian Ambassador to Egypt, Mr Robert Bowker visited the Sukari site. The visit formed part of the Company’s policy of keeping the Australian Embassy informed with respect to the Company’s progress and activities in Egypt and ensuring a good working relationship.

In March 2006, the Company completed a placement raising approximately GBP 20,600,000 before expenses. 75,000,000 shares were placed at 27.5p with the view to using the funds to secure long lead time items and to cover pre-mining costs as well as general working capital.

In May 2006, His Excellency Engineer Sameh Fahmy, the Minister for Petroleum and Mineral Resources, and members of Parliament revisited site, resulting in positive media coverage and increased public interest in the project.



The Directors of Centamin Egypt Limited submit herewith the annual fi nancial report of the Company for the fi nancial year ended 30 June 2006. In order for the Company to comply with the provisions of the Corporations Act 2001, the Directors’ Report is as follows:-

Directors

The names and particulars of the directors of the Company during or since the end of the fi nancial year are:-

Mr Sami El-Raghy B.Sc. (Hons), FAusIMM, FSEGChairman, age 65Director since 29 April 1993

A graduate of Alexandria University in 1962, Mr El-Raghy worked in Egypt and Europe before moving to Australia in 1968 and joining American Smelting and Refi ning Company (Asarco). He was instrumental in the discovery and development of a number of gold mines, including the Wiluna Gold Mine for Asarco and the Mt Wilkinson Gold mine for Chevron Exploration. Mr El-Raghy recognised the potential of the Marymia Dome and the Barwidgee Yandal Belt long before these areas became the most sought after mining areas in Australia. Mr El-Raghy brings to the board over 39 years experience in the industry, both in Australia and overseas.

Mr Josef El-Raghy B.CommManaging Director/CEO, age 35Director since 26 August 2002

Josef El-Raghy holds a Bachelor of Commerce Degree from the University of Western Australia and had a ten year career in stock broking. He was formerly a director of both CIBC Wood Gundy and Paterson Ord Minnett. His expertise in international capital markets has greatly assisted the Company in its fundraising and development activities. Mr El-Raghy was also a director of ISIS Resources Plc (now Verona Pharma Plc) from 24 February 2005 to 18 September 2006.

Mr Colin Cowden FAII, ASA, ACIS, ACIM, FNIBA, CDNon Executive Director, age 62Member Audit CommitteeMember Remuneration CommitteeDirector since 8 March 1982

Colin Cowden is the Executive Chairman of Cowden Limited, a licensed insurance broking company formed in 1972. Cowden Limited is a prominent broking fi rm in Western Australia with branch offi ces in Sydney, Melbourne and Adelaide. Mr Cowden has been a director of Wentworth Holdings Limited since 26 October 2005, and from 27 November 1998 until 27 October 2005, was a director of OAMPS Limited.

Mr G. Brian Speechly FAusIMMNon Executive Director, age 73Member Audit CommitteeMember Remuneration CommitteeDirector since 15 August 2000

Brian Speechly is a Fellow of the Australasian Institute of Mining and Metallurgy with over 49 years experience in the mining industry. During his career, Mr Speechly has been involved in over 320 mining projects and is recognised in Australia and overseas as an expert in both underground and open pit mining and design. He is particularly noted for his innovative and low cost approaches to mining issues. Mr Speechly has been a director of Dynasty Metals & Mining Inc since 28 April 2004.

Directors Report

page 19

Dr Thomas G. Elder PhD, FIMM, FGSNon Executive Director, age 67Director since 8 May 2002

Dr Elder is a geology graduate of Durham University and post-graduate NATO Scholar at the University of Oslo. His extensive background in mineral exploration was gained with major companies including BP and Rio Tinto. Dr Elder ran exploration programmes in the UK, Spain, Italy, Portugal and Greenland for Cominco, prior to his appointment as worldwide Exploration Manager for BP Minerals in 1983. Following the take-over by Rio Tinto in 1989, he had special responsibility for project development in the Former Soviet Union. Dr Elder has been a non-executive director of Angus & Ross since 12 January 2006 and has been the President of Mano River Resources Inc since 04 October 1998.

Mr H. Stuart BottomleyNon Executive Director, age 61Director since 26 September 2005

Stuart Bottomley worked as a portfolio manager for over twenty years, fi rstly with the “Target Group” of trusts and subsequently with Fidelity International. For the last 15 years, he has acted as a consultant to a number of private and public companies with a growing emphasis on the mining industry. Mr Bottomley has also been a director of ISIS Resources Plc (now Verona Pharma Plc) since 24 February 2005 and African Consolidated Resources Plc since 27 May 2005.

Management

Mr Wayne Foote (BEng, MAusIMM)Project Manager

Wayne Foote holds a Bachelor of Engineering in Mining and has been involved at a senior level in several mining operations, most recently as the Operations Manager of the Golden Pride Project in Tanzania for Resolute Limited. Wayne is responsible for the management and supervision of the Sukari Project development, including the preparation of the upgraded feasibility study to a bankable standard for the development of a 4 to 5 million tonne per annum processing facility, as well as subsequent personnel recruitment, development, construction and operation of the project.

Mr Roger Speers BEng (1st Hons WASM), AIG Senior Exploration Geologist

Mr Speers is an experienced exploration geologist who was employed for 4½ years in regional exploration and near mine resource development with AngloGold Ashanti at their Geita Gold Mine and regional projects in Tanzania. Prior to Tanzania, Mr Speers was employed by AngloGold and Acacia Resources in Western Australia at their Sunrise Dam and Laverton/Kalgoorlie regional exploration teams. Mr Speers is responsible for developing the potential additional regional gold resources around Sukari as well as assisting with the Sukari resource development.

Mr Richard Osman B.Sc.(Hons.), M.Sc., MCSM, MAusIMMSenior Mine Geologist - Sukari

Mr Osman holds a master’s degree from Camborne School of Mines in Mining Geology and is an experienced mine and exploration geologist who was employed in the mining geology and near mine resource development for 5 years at the Jubilee and Big Bell operations in Western Australia owned by New Hampton Goldfi elds and Harmony Gold. Mr Osman is responsible for drill hole planning, reserve defi nition and implementation of and maintaining all of the mining data systems at Sukari.

Mrs Heidi Brown GCertAppFin (Finsia)Company Secretary

Mrs Brown has over 8 years experience in the fi nance and securities industries and has completed the Chartered Secretaries Australia Graduate Diploma of Corporate Governance. Mrs Brown also holds a Graduate Certifi cate of Applied Finance and Investment and a Diploma of Financial Advising through the Financial Services Institute of Australasia (Finsia).

Directors Report


Mr Mark Smith B.Bus. (Accy), CPA, MAICDFinance Manager

Mr Smith has a Bachelor of Business undergraduate degree, with a major in Accountancy, obtained from the Queensland University of Technology and is a Certifi ed Practicing Accountant with 15 years post-graduate experience across a wide variety of industries. He has held senior fi nancial positions with a number of Australian publicly listed companies in the resources sector.

Mr Youssef El-RaghyGeneral Manager - Egyptian Operations

An offi cer graduate of the Egyptian Police Academy Mr El-Raghy held senior management roles within the Egyptian Police force for a period in excess of ten years, having attained the rank of captain, prior to joining the Company. Mr El-Raghy has extensive contacts within the government and industry and maintains excellent working relationships with all of the Company’s stakeholders within Egypt.

Mr Esmat El-RaghyField Manager - Sukari Operation

A retired Air Defence General, Esmat is responsible for fi eld administration and liaising with the army, police and local authorities.

Mr Taha LamadaAdministration Manager - Egyptian Operations

A commerce graduate of Alexandria University, Taha is responsible for Egyptian administration and human resource management.

Mr Samir Abd El-AzizFinance Manager - Egyptian Operations

A Chartered Accountant and member of the Society of Accounting and Auditing, Samir is responsible for implementation of the Company’s Egyptian budget and dealings with Egyptian banks and fi nancial institutions.

Directors’ meetings

The number of directors’ meetings and number of meetings attended by each of the directors of the Company during the fi nancial year were:

Director No of Meetings Held No of Meetings Attended

Mr S El-Raghy 8 8

Mr C Cowden 8 8

Mr G B Speechly 8 3

Dr T G Elder 8 8

Mr J El-Raghy 8 8

Mr H S Bottomley 8 6

In addition to these formal meetings, during the year the Directors considered and passed fi ve (5) Circular Resolutions pursuant to clause 15.10 of the Company’s constitution.

Directors Report

page 21

Audit committee meetings


Mr C Cowden 1 1

Mr G B Speechly 1 1

Since year end, the Audit Committee has met once to consider matters within its terms of reference.

Remuneration committee meetings and resolutions


Mr C Cowden 1 1

Mr G B Speechly 1 1

During the year, the Remuneration Committee met once to consider matters within its terms of reference and also passed one (1) Circular Resolution pursuant to the Company’s constitution.

Principal activities

The principal activity of the consolidated entity during the course of the fi nancial year was the exploration for precious and base metals. There were no signifi cant changes in the nature of the activities of the consolidated entity duringthe year.

Dividends

No dividends have been declared or paid since the end of the previous fi nancial year.

Changes in state of affairs

There was no change in the state of affairs of the consolidated entity during the fi nancial year.

Future developments

It is the objective of the Company, to continue to drill at the Sukari project, so as to increase the overall size of the geological resource, whilst at the same time, conclude the Bankable Feasibility Study into the proposed construction of a processing plant with a throughput rate of 4 to 5 million tonnes per annum. Subsequent to this, the Company’s intention is to arrange project development fi nance so as to commence construction of the processing plant and ancillary infrastructure.

Options

Options issued during the fi nancial year

A total of 5,750,000 unlisted options were issued during the fi nancial year to 30 June 2006. The details of these options are as follows:-

Number of Ordinary shares under option Exercise Price Expiry Date

4,250,000 $0.3500 31 October 2010

1,500,000 $0.4355 08 December 2008

Directors Report


Options converted during the fi nancial year

A total of 1,235,000 unlisted options were exercised during the fi nancial year to 30 June 2006. The details of these options are as follows:-

Number of Options Exercise Price $ Expiry Date

250,000 0.2900 11 November 2005

510,000 0.2310 12 November 2006

130,000 0.2310 17 November 2006

250,000 0.3549 15 December 2006

45,000 0.2804 17 February 2008

50,000 0.3500 31 October 2010

The market weighted average closing price of Centamin Egypt Limited shares during the 2005-2006 year was $0.5392.

Options granted to directors

There were 1,500,000 options granted to directors during the fi nancial year to 30 June 2006. The details of these options are as follows:-

Name Offi ce Issue Date

No of Unquoted Options

Exercise Price Expiry Date

Mr C N Cowden Non-Executive Director 08 December 2005 500,000 43.55 cents 08 December 2008

Dr T G Elder Non-Executive Director 08 December 2005 500,000 43.55 cents 08 December 2008

Mr H S Bottomley Non-Executive Director 08 December 2005 500,000 43.55 cents 08 December 2008

Employee option plan

At the Annual General Meeting on 29 November 2002, shareholders approved the Employee Options Plan 2002. The following options have been issued to Executives and Employees under the plan to date.

Number of Ordinary shares under option

Exercise Price $ Expiry Date

250,000 0.2900 11 November 2005

1,160,000 0.2310 12 November 2006

130,000 0.2310 17 November 2006

750,000 0.3549 15 December 2006

775,000 0.2804 04 February 2008

410,000 0.2804 17 February 2008

1,500,000 0.4355 08 December 2008

4,250,000 0.3500 31 October 2010

250,000 0.6566 30 August 2009

Directors Report

page 23

Options issued subsequent to balance date

On 30 August 2006, an additional 250,000 options were issued at an exercise price of $0.6566 with a term of 3 years. These options vest over 12 months with 50% exercisable after 6 months and the other 50% exercisable after 12 months.

Options exercised subsequent to balance date

450,000 options have been exercised subsequent to balance date. The details of these options are as follows:-

Number Exercise Price $ Expiry Date

350,000 0.2310 11 November 2005

100,000 0.2804 04 February 2008

Environmental regulations

The consolidated entity is currently complying with relevant environmental regulations and has no outstanding environmental orders against it.

Events subsequent to balance date

In July 2006, the company announced that it is considering the purchase of used process plant items in an effort to reduce both the procurement time and the cost for major plant items. The search has identifi ed a recently closed operation that contains most of the process plant items that Centamin will require for the Sukari project.

The potential purchase of this plant represents an opportunity to materially reduce the cost of development and also accelerate the construction timetable. Testing of the structural integrity of key plant items has been arranged and negotiations with the plant owner are at an advanced stage.

Consequently the completion of the Bankable Feasibility Study (BFS) will be delayed while a thorough review of this process plant is completed.

Review of operations

A review of the Company’s operations is located at the beginning of this report.

Indemnifi cation of directors & offi cers

During the fi nancial year, the Company paid a premium in respect of a contract insuring the directors and offi cers of the Company and any related body corporate against a liability incurred as a director or offi cer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

The Company has not otherwise indemnifi ed its directors or offi cers.

Directors Report


Remuneration Report

KEY MANAGEMENT PERSONNEL DETAILS

The key management personnel of Centamin Egypt Limited during the fi nancial year were:-

- Mr Sami El-Raghy (Chairman), appointed 29 April 1993;- Mr Josef El-Raghy (Managing Director/CEO), appointed 26 August 2002;- Dr Thomas G Elder (Non-Executive Director) appointed 08 May 2002;- Mr Colin Cowden (Non-Executive Director) appointed 08 March 1982; - Mr G Brian Speechly (Non-Executive Director), appointed 15 August 2000; - Mr H Stuart Bottomley (Non-Executive Director), appointed 26 September 2005;- Mrs Heidi Brown (Company Secretary), appointed 21 July 2004; and- Mr Wayne Foote (Project Manager), appointed 13 October 2005.

KEY MANAGEMENT PERSONNEL COMPENSATION

The Remuneration Committee reviews the remuneration packages of all key management personnel on an annual basis. Remuneration packages are reviewed and determined with due regard to current market rates and are benchmarked against comparable industry salaries, adjusted by a performance factor to refl ect changes in the performance of the Company.

2006

Short-term employee benefi tsPost-employment

benefi tsOther

long-term employee benefi ts

$

Termina-tion

benefi ts$

Share-based payment

Total$

Equity-settled

Cash settled

$Other

$

Salary& Fees

$Bonus

$

Non-monetary

$Other

$

Super-annuation

$Other

$

Shares & units

$

Options & rights

$

S El-Raghy* 357,353 - - - - - - - - - - - 357,353

J El-Raghy* 303,609 - 24,978 - 2,860 - - - - - - - 331,447

T Elder* 49,167 - - - - - - - - 31,868 - - 81,035

C Cowden 25,000 - - - 2,250 - - - - 31,868 - - 59,118

G B Speechly 25,000 - - - 2,250 - - - - - - - 27,250

H Bottomley* 44,107 - - - - - - - - 31,868 - - 75,975

W Foote(1) 326,087 - 2,790 - 29,348 - - - - 59,968 - - 418,193

H Brown***(1) 67,000 20,000 - - 7,830 - - - - 16,286 - - 111,116

Total 1,197,323 20,000 27,768 - 44,538 - - - - 171,858 - - 1,461,487

* Non-resident directors** Options value as per Black Scholes pricing method *** Bonus paid in respect to added responsibilities and represents 18% of total remuneration.(1) W Foote and H Brown were the only two Executive employees of the Consolidated group during the fi nancial year.

Directors Report

page 25

2005


benefi tsOther


$

Termina-tion

benefi ts$

Share-based payment

Total$

Equity-settled

Cash settled

$Other

$

Salary& Fees

$Bonus

$

Non-monetary

$Other

$

Super-annuation

$Other

$

Shares & units

$

Options & rights

$

S El-Raghy* 376,283 150,000 144 - - - - - - - - - 526,427

J El-Raghy 224,808 - 20,449 - 22,481 - - - - - - - 267,738

T Elder* 49,580 - - - - - - - - 9,573 - - 59,153

C Cowden 25,000 - - - 2,250 - - - - 9,573 - - 36,823

G B Speechly 25,000 - - - 2,250 - - - - 9,573 - - 36,823

H Michael**** 89,856 - - - 8,986 - - - - - - - 98,842

M J Lynch 74,489 - - - 10,571 - - - - 16,851 - - 101,911

D Franks 87,599 - - - 16,588 - - - - 9,997 - - 114,184

M Kriewaldt 69,000 - - - - - - - - - - 69,000

H Brown 51,596 - - - 4,644 - - - - 15,425 - - 71,665

C Tyndall ***** 17,832 - - - 189 - - - - 4,568 - - 22,589

Total 1,091,043 150,000 20,593 - 67,959 - - - - 75,560 - - 1,405,155

* Non-resident directors** Options value as per Black Scholes pricing method *** Bonus paid in respect to performance and represents 28.5% of total remuneration.**** Mr Michael ceased employment with the Company on 26 November 2004. ***** Mrs Tyndall ceased employment with the Company on 19 July 2004.

Employment Contracts of Directors and Senior Executives

Remuneration and other terms of employment for the following key management personnel are formalised in employment agreements, the terms of which are set out below:-

Josef El-Raghy, Managing Director/CEO- term: 3 years (expiring 01 September 2008)- base salary: $300,000 pa, reviewed annually by the remuneration committee

Sami El-Raghy, Chairman- term: 3 months notice of termination period- base salary: $310,000 pa plus 27.5% loading for time spent in Egypt, reviewed annually by the remuneration committee

Wayne Foote, Project Manager- term: 1 year (expiring 13 October 2006)- base salary: $430,912 plus 9% superannuation

Heidi Brown, Company Secretary- term: 1 month notice of termination period- base salary: $70,000 + 9% superannuation, reviewed annually by the remuneration committee

No key management personnel is entitled to any termination payments apart from remuneration payable up to and including the date of termination and all payments due by way of accrued leave.

Directors Report

Options Issued to Key Management Personnel

Options are issued to key management personnel under the Employee Share Option Plan 2002 as part of their remuneration. Options are offered to key management personnel at the discretion of the Directors, having regard, among other things, to the length of service with the Group, the past and potential contribution of the person to the Group and in some cases, performance. The following options have been issued to key management personnel to date:-

Name Offi ce Issue DateNo of Unquoted

Options Exercise Price Expiry Date

Mr C N Cowden Non-Executive Director 15 December 2003 250,000 35.49 cents 15 December 2006

08 December 2005 500,000 43.55 cents 08 December 2008

Dr T G Elder Non-Executive Director 15 December 2003 250,000 35.49 cents 15 December 2006

08 December 2005 500,000 43.55 cents 08 December 2008

Mr G B Speechly Non-Executive Director 15 December 2003 250,000 35.49 cents 15 December 2006

Mr H S Bottomley Non-Executive Director 08 December 2005 500,000 43.55 cents 08 December 2008

Mrs H Brown Company Secretary 12 November 2003 100,000 23.10 cents 12 November 2006

04 February 2005 200,000 28.04 cents 04 February 2008

Mr W Foote Project Manager 31 October 2005 2,500,000 35.00 cents 31 October 2010

The options issued to C Cowden, T Elder, G Speechly, H Bottomley and H Brown vest and are exercisable over a period of 12 months, with 50% vesting and exercisable after 6 months and the other 50% vesting and exercisable after 12 months of issue. These options have a term of 3 years.

The options issue to W Foote are subject to performance based hurdles. 500,000 of the 2,500,000 options may only be exercised after the completion of the bankable feasibility study and subsequent bank fi nance approval. A further 1,000,000 options may be exercised on completion of construction and the remaining 1,000,000 options may be exercised following the fi rst gold pour from the Sukari Gold Project. The options have a term of 5 years. These performance conditions were chosen as they refl ect the key objectives of W Foote’s role as project manager.

Options Exercised by Key Management Personnel

The following options were exercised by key management personnel during the year:-

Name Offi ce Exercise DateNo of Unquoted

Options Exercise Price Expiry DateMr C N Cowden Non-Executive Director 26 May 2006 250,000 35.49 cents 15 December 2006

Mrs H Brown Company Secretary 27 April 2006 100,000 23.10 cents 12 November 2006

The options exercised by C Cowden during the year were issued on 15 December 2003. The value of the options is determined internally using the Black-Scholes Pricing Model and are included in remuneration of a proportionate basis from grant date to vesting date. These options vest and are exercisable over a period of 12 months, with 50% vesting and exercisable after 6 months (15 June 2004) and the other 50% vesting and exercisable after 12 months of issue (15 December 2004). These options expire after 3 years. The closing market price at the date of exercise was $0.70.

The options exercised by H Brown during the year were issued on 12 November 2003. The value of the options is determined internally using the Black-Scholes Pricing Model and are included in the remuneration of a proportionate basis from grant date to vesting date. These options vest and are exercisable over a period of 12 months, with 50% vesting and exercisable after 6 months (12 May 2004) and the other 50% vesting and exercisable after 12 months of issue (12 November 2004). These options expire after 3 years. The closing market price at the date of exercise was $0.86.

Directors Report


Value of Key Management Personnel Options Granted, Exercised and Lapsed During the Year

The following table shows the value of key management personnel options granted, exercised and lapsed during the year:-

Name

Options GrantedValue at Grant

Date$

Options ExercisedValue at

Exercise Date$

Options LapsedValue at Time

of Lapse$

Total Value of Options Granted,

Exercised and Lapsed

$

Value of Options included in

Remuneration for the Year

$

Percentage of Total Remuneration

for the Year that consists of Options

%

Mr C Cowden 215,000 175,000 - 390,000 31,868 53.91

Dr T G Elder 215,000 - - 215,000 31,868 39.33

Mr G B Speechly - - - - - -

Mr H S Bottomley 215,000 - - 215,000 31,868 41.95

Mrs H Brown - 86,000 - 86,000 16,286 14.66

Mr W Foote 950,000 - - 950,000 59,968 14.34

Directors’ Shareholdings

The relevant interest of each Director in the share capital of the Company shown in the Register of Directors’ Shareholdings as at the date of this report are:-

DirectorFully paid

ordinary sharesPartly paid

ordinary sharesFull paid converting cumulative

non-participating preference sharesExecutive share

optionsConvertible

Notes

S El-Raghy *78,235,754 - - - -

J El-Raghy *79,185,754 - - - -

C Cowden 523,026 - - 500,000 -

G Speechly - - - 250,000 -

T Elder - - - 750,000 -

H Bottomley 3,000,000 - - 500,000 -

*The total shares held by Mr S El-Raghy and Mr J El-Raghy arise due to them both being directors/trustees of the following personally related entities:

- Nordana Pty Ltd 4,990,668 shares

- Nordana Pty Ltd <Super Fund A/C> 17,595,714 shares

- El-Raghy Kriewaldt Pty Ltd 55,299,372 shares

- S & M El-Raghy <The El-Raghy Family Account> 350,000 shares

The balance of 950,000 shares are held by Mr J El-Raghy being a director of Montana Realty Pty Ltd <Super Fund A/C>

Since the end of the previous fi nancial year no Director of the Company has received or become entitled to receive any benefi t (other than a benefi t included in the aggregate amount of remuneration received or due and receivable by Directors shown in the consolidated accounts) because of a contract made by the Company, its controlled entities or a related body corporate with the Director or with a fi rm of which the Director is a member, or with an entity in which the Director has a substantial interest. For further details refer to Note 22 to the fi nancial statements.

Directors Report

page 27

Directors Report

The Auditor’s Independence Declaration is included on page 29 of the fi nancial report.

Non-audit services

Tax services were provided by Deloitte Touche Tohmatsu during the year as a result of the merger between Deloitte and Corporate Tax Consulting. The directors are satisfi ed that the provision of non-audit services, during the year, by the auditor (or by another person or fi rm on the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfi ed that the tax services provided did not compromise the external auditor’s independence for the following reasons:-

- all non-audit services have been reviewed by the Board to ensure they do not adversely affect the integrity and objectivity of the auditor;

- the majority of the fees paid to Deloitte were as a result of work that had been undertaken by Corporate Tax Consulting prior to the merger; and

- the nature of the non-audit services provided is not inconsistent with auditor independence requirements.

Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in note 27 to the fi nancial statements.

Signed in accordance with a resolution of the directors made pursuant to s. 298(2) of the Corporations Act 2001.

On behalf of the Directors

__________________________


Perth, 21 September 2006

Auditor’s Independence Declaration

Under Section 307C of the Corporations Act 2001


page 29

Auditor’s Independence Declaration

Deloitte Touche TohmatsuA.C.N. 74 490 121 060

Woodside PlazaLevel 14240 St Georges TerracePerth WA 6000GPO Box A46Perth WA 6837 Australia

DX 206Tel: +61 (0) 8 9365 7000Fax: +61 (0) 8 9365 7001www.deloitte.com.au

The Board of DirectorsCentamin Egypt Limited57 Kishorn RoadMt Pleasant WA 6153

21 September 2006

Dear Board Members

Centamin Egypt Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Centamin Egypt Limited.

As lead audit partner for the audit of the fi nancial statements of Centamin Egypt Limited for the fi nancial year ended 30 June 2006, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

(ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

DELOITTE TOUCHE TOHMATSU

Keith JonesPartnerChartered Accountants

page 29


Corporate Governance Statement

The Board of Directors of Centamin Egypt Limited is responsible for the corporate governance of the consolidated entity. The Board guides and monitors the business and affairs of Centamin Egypt Limited on behalf of the shareholders by whom they are elected and to whom they are accountable.

To ensure the Board is well equipped to discharge its responsibilities it has established guidelines for the nomination and selection of Directors and for the operation of the Board.

Unless disclosed below, the best practice recommendations of both the ASX Corporate Governance Council and the AIM Listing Rules (The Alternative Investment Market of the London Stock Exchange), including the Combined Code On Corporate Governance have been applied for the entire fi nancial year ended 30 June 2006. Where there has been any variation from the recommendations it is because the Board believes that the Company is not as yet of a size, nor are its fi nancial affairs of such complexity to justify some of those recommendations and as such those practices continue to be the subject of the scrutiny of the full Board.

Board Composition:

The Board comprises six Directors, of whom the Chairman and the Managing Director/CEO are the only Executive Directors. Both the ASX Listing Rules and the Combined Code on Corporate Governance favour that the Chairman be an independent Director, however as Mr Sami El-Raghy has been primarily based in Egypt during this stage of the Company’s development, where his knowledge of the Company’s projects, the Egyptian language, culture and government contacts are invaluable, the Board believe that his role and status be both as an Executive and as Chairman.

The skills, experience and expertise relevant to the position of each Director who is in offi ce at the date of the annual report, their attendances at meetings and their term of offi ce are detailed in the Directors’ Report. The majority of the Board are independent Directors, the names of the Directors of the Company in offi ce at the date of this statement are:

Name Position Committees

Sami El-Raghy Chairman - Executive Director -

Josef El-Raghy Managing Director/CEO -

Colin N Cowden Independent Director Audit and Remuneration

G Brian Speechly Independent Director Audit and Remuneration

Thomas G Elder Independent Director -

H Stuart Bottomley Independent Director -

When determining whether a Director is independent, the Board has determined that the Director must not be an Executive and:

• is not a substantial shareholder of the Company or an offi cer of, or otherwise associated directly with, a substantial shareholder of the Company;

• within the last three years has not been employed in an executive capacity by the Company or another group member, or been a Director after ceasing to hold any such employment;

• within the last three years has not been a principal or employee of a material professional adviser or a material consultant to the Company or another group member, or an employee materially associated with the service provided;

• is not a material supplier or customer of the Company or other group member, or an offi cer of or otherwise associated directly or indirectly with a signifi cant supplier or customer;

• has no material contractual relationship with the Company or another group member other than as a Director of the Company;

• is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act in the best interests of the Company.

page 31


Independent Directors have the right to seek independent professional advice in the furtherance of their duties as Directors, at the Company’s expense. Written approval must be obtained from the Managing Director prior to incurring expenses on behalf of the Company.

S El-Raghy, J El-Raghy, C Cowden and G B Speechly are also Directors of the wholly owned subsidiary companies, Pharaoh Gold Mines NL, Viking Resources Ltd, and North African Resources NL. J El-Raghy and T Elder are also Directors of the subsidiary Company, Centamin Limited.

The Board and Board Nominations:

The Company does not presently operate a nomination committee however as the Company approaches the development of the Sukari project and as it shifts its corporate profi le increasingly towards the capital markets of Europe, the Board is establishing guidelines for the future nomination and selection of potential new directors. In the interim, the full Board (subject to members voting rights in general meeting) is responsible for selection of new members and has regard to a candidate’s experience and competence in areas such as mining, exploration, geology, fi nance and administration that can assist the Company in meeting its corporate objectives and plans.

Under the Company’s Constitution:

• the maximum number of Directors on the Board is ten;• a Director (other than the Managing Director) may not retain offi ce for more than three years without submitting for re-election;

and• at the Annual General Meeting each year effectively one third of the Directors in offi ce (other than the Managing Director)

retire by rotation and must seek re-election by shareholders.

Securities Trading Policy:

The Company has not as yet adopted a formal securities trading policy however the Directors and employees are restricted from acting on material information until it has been released to the market in accordance with the ASX requirements of continuous disclosure. Furthermore the ability of Directors and certain employees of AIM listed companies to deal in the Company’s securities is restricted in a number of ways, by statute, common law and by Rule 21 of the AIM Rules. This rule imposes restrictions beyond those imposed by law in that the Directors and certain employees and persons connected with them do not abuse and do not place themselves under suspicion of abusing price-sensitive information that they have or are thought to have, especially in periods leading up to announcement of results (close periods).

Remuneration Committee and Policies:

The Remuneration Committee comprises Mr Colin Cowden and Mr Brian Speechly, both independent Directors.

All compensation arrangements for Directors and Senior Executives are determined by the Remuneration Committee and approved by the Board, after taking into account the current competitive rates prevailing in the market.

The amount of remuneration for all Directors including the full remuneration packages, comprising all monetary and non-monetary components of the Executive Directors and Executives, are detailed in the Directors’ Report.

All Executives receive base salary, superannuation, fringe benefi ts and in some cases, performance incentives. Executives and staff, if invited by the Board of Directors, may participate in the Employee Share Option Plan. These packages are reviewed on an ongoing basis and in most cases are reviewed against predetermined performance criteria.

All remuneration paid to executives is valued at the cost to the Company and is measured in accordance with the applicable accounting standards. Shares issued to Executives are valued as the difference between the market price of those shares and the amount paid by the Executive. Options are valued using the Black-Scholes methodology.


The Board expects that the remuneration structure that is implemented will result in the Company being able to attract and retain the best Executives to manage the economic entity. It will also provide the Executives with the necessary incentives to work to grow long-term shareholder value.

The Board can exercise its discretion in relation to approving incentives, bonuses and options and can recommend changes to the Committee’s recommendations.

There are no schemes for retirement benefi ts other than statutory superannuation for independent Directors.

External auditors:

The auditors of the Company, Deloitte Touche Tohmatsu (“Deloitte”), have open access to the Board of Directors at all times. Deloitte have audited the Company and its subsidiaries for a number of years and have adopted a policy of rotating audit partners every fi ve years. The last rotation of the audit partner occurred during the fi nancial year ended 30 June 2003.

Deloitte do attend the Company’s Annual General Meeting and it is consistent with their current business practice, and is in accordance with s250RA of the Corporations Act 2001.

Audit committee:

The Audit Committee comprises Mr Colin Cowden and Mr Brian Speechly, both independent Directors.

The Company has a duly constituted Audit Committee which comprises the two Australia based independent Directors whose names, qualifi cations and attendances are included in the Directors’ Report. The responsibilities of the Audit Committee are laid out in its terms of reference, and amongst other things, includes the responsibility to ensure that an effective internal control framework exists within the entity, to produce half year and annual fi nancial statements. This includes the safeguarding of assets, the maintenance of proper accounting records, and the reliability of fi nancial information as well as non-fi nancial considerations.

Managing risks:

The Board meets regularly to evaluate, control, review and implement the Company’s operations and objectives.

Regular controls established by the Board include:

• detailed monthly fi nancial reporting;• delegation of authority to the Managing Director to ensure approval of expenditure obligations;• implementation of operating plans, cash fl ows and budgets by management and Board monitoring of progress against

projections; and• procedures to allow Directors, and management in the furtherance of their duties, to seek independent professional advice

via the utilisation of various external technical consultants.

The Board recognises the need to identify areas of signifi cant business risk and to develop and implement strategies to mitigate these risks.


page 33

Commitment to stakeholders & ethical standards:

The Board supports the highest standards of corporate governance and requires its members and the management and staff of the Company to act with integrity and objectivity in relation to:

• Compliance with laws and regulations affecting the Company’s operations;• The ASX’s Corporate Governance and the AIM Rules, including the Combined Code On Corporate Governance;• Employment practices;• Responsibilities to the community;• Responsibilities to the individual;• The environment;• Confl ict of interests;• Confi dentiality;• Ensure that shareholders and the fi nancial community are at all times fully informed in accordance with the spirit and letter

of the ASX’s continuous disclosure requirements and the AIM Rules;• Corporate opportunities or opportunities arising from these for personal gain or to compete with the Company;• Protection of and proper use of the Company’s assets; and• Active promotion of ethical behaviour.

Monitoring of the Board’s Performance and Communication to Shareholders:

In order to ensure that the Board continues to discharge its responsibilities in an appropriate manner, the performance of all Directors is constantly reviewed by the Chairman. The Company does not presently have an evaluation of the Board and all the Board members performed by an independent consultant however it may do so once the Company commences development of the Sukari project.

The Board of Directors aims to ensure that the shareholders, on behalf of whom they act, are informed of all information necessary to assess the performance of the Directors. Information is communicated to the shareholders through:

• the Annual Report which is distributed to all shareholders;• the availability of the Company’s Quarterly Report to shareholders so requesting;• the Half-Yearly Report distributed to shareholders so requesting;• adherence to continuous disclosure requirements;• the Annual General Meeting and other meetings so called to obtain shareholder approval for Board action as appropriate;

and• the provision of the Company's website containing all of the above mentioned reports and its constant update and

maintenance.

Statement by the Managing Director and Company Secretary:

The Managing Director and Company Secretary confi rm to the board that the group’s fi nancial position presents a true and fair view and that the fi nancial statements are founded on a sound system of risk management, internal compliance and control. Further, it is confi rmed that the groups risk management and internal compliance is operating effi ciently and effectively.



Independent Audit Report

TO THE MEMEBERS OF CENTAMIN EGYPT LIMITED

Deloitte Touche TohmatsuA.C.N. 74 490 121 060

Woodside PlazaLevel 14240 St Georges TerracePerth WA 6000GPO Box A46Perth WA 6837 Australia

DX 206Tel: +61 (0) 8 9365 7000Fax: +61 (0) 8 9365 7001www.deloitte.com.au

Independent audit report

to the members of Centamin Egypt Limited

ScopeThe fi nancial report and directors’ responsibility

The fi nancial report comprises the balance sheet, income statement, cash fl ow statement, statement of changes in equity, a summary of signifi cant accounting policies and other explanatory notes and the directors’ declaration for both Centamin Egypt Limited (the company) and the consolidated entity, for the fi nancial year ended 30 June 2006 as set out on pages 36 to 66. The consolidated entity comprises the company and the entities it controlled at the year’s end or from time to time during the fi nancial year.

The directors of the company are responsible for the preparation and true and fair presentation of the fi nancial report in accordance with Accounting Standards in Australia and the Corporations Act 2001. This includes responsibility for the maintenance of adequate fi nancial records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the fi nancial report.

Audit approach

We have conducted an independent audit of the fi nancial report in order to express an opinion on it to the members of the company. Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the fi nancial report is free of material misstatement. The nature of an audit is infl uenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal controls, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.

We performed procedures to form an opinion whether, in all material respects, the fi nancial report is presented fairly in accordance with Accounting Standards in Australia and the Corporations Act 2001 so as to present a view which is consistent with our understanding of the company’s and the consolidated entity’s fi nancial position, and performance as represented by the results of their operations, their changes in equity and their cash fl ows.

Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the fi nancial report, and the evaluation of accounting policies and signifi cant accounting estimates made by the directors.

page 35

Independent Audit Report

While we considered the effectiveness of management’s internal controls over fi nancial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.

The audit opinion expressed in this report has been formed on the above basis.

Audit OpinionIn our opinion, the fi nancial report of Centamin Egypt Limited is in accordance with the Corporations Act 2001, including:

(a) giving a true and fair view of the company’s and consolidated entity’s fi nancial position as at 30 June 2006 and of their performance for the year ended on that date; and

(b) complying with Accounting Standards in Australia and the Corporations Regulations 2001.

DELOITTE TOUCHE TOHMATSU

Keith JonesPartnerChartered AccountantsPerth, 21 September 2006


The directors declare that:

a) The attached fi nancial statements and notes thereto comply with Accounting Standards;b) The attached fi nancial statements and notes thereto give a true and fair view of the fi nancial position and performance of the

Company and the consolidated entity;c) In the directors’ opinion, the attached fi nancial statements and notes thereto are in accordance with the Corporations Act

2001; andd) In the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when

they become due and payable.e) The directors have given the declarations required by s.295A of the Corporations Act 2001.

Signed in accordance with a resolution of the directors made pursuant to s. 295(5) of the Corporations Act 2001.

On behalf of the Directors

__________________________


Perth, 21 September 2006

Directors Declaration

page 37

Income Statement

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2006

Consolidated Company Note 2006 2005 2006 2005 $ $ $ $

Revenue 2 1,140,700 1,046,309 1,110,710 1,046,137

Other income 2 - 102,351 1,196,597 538,934

Administration expenses (1,580,463) (1,195,831) (1,561,734) (1,264,190)

Foreign exchange gain/(loss) 2 2,011,921 (543,942) 2,065,253 (562,767)

Marketing expenses (218,531) (145,044) (218,531) (144,044)

Travelling expenses (337,132) (108,371) (337,132) (108,371)

Other expenses (5,665) (25,884) - -

Profi t/(Loss) Before Income Tax 1,010,830 (870,412) 2,255,163 (494,301)

Tax (expense)/income 3 - - - -

Net Profi t/(Loss) for the period 1,010,830 (870,412) 2,255,163 (494,301)

Earnings Per Share: Basic (cents per share) 30 0.194 (0.16)

Diluted (cents per share) 30 0.192 (0.16)

Notes to the fi nancial statements are included on pages 41 to 66.


Balance Sheet

AS AT 30 JUNE 2006


CURRENT ASSETSCash and cash equivalents 54,493,427 17,984,972 53,966,456 17,907,208Trade and other receivables 5 183,004 298,118 114,243 8,956Prepayments 6 113,399 114,527 28,206 22,206Total current assets 54,789,830 18,397,617 54,108,905 17,938,370

NON-CURRENT ASSETSTrade and other receivables 5 - - 40,734,980 27,511,390Plant and equipment 7 1,070,101 1,178,079 83,588 57,235Investments 8 - - 5,511,169 5,511,169Exploration expenditure 9 41,388,637 28,715,883 330,821 330,821

Total non-current assets 42,458,738 29,893,962 46,660,558 33,410,615

Total assets 97,248,568 48,291,579 100,769,463 51,348,985

CURRENT LIABILITIESTrade and other accounts payable 10 861,259 232,549 141,651 69,748Provisions 11 325,929 234,092 42,447 166,049

Total current liabilities 1,187,188 466,641 184,098 235,797

NON-CURRENT LIABILITIESTrade and other accounts payable 10 205,448 196,850 - -

Total non-current liabilities 205,448 196,850 - -

Total liabilities 1,392,636 663,491 184,098 235,797

Net assets 19 95,855,932 47,628,088 100,585,365 51,113,188

EQUITYContributed equity 12 115,344,046 68,602,890 115,344,046 68,602,890Reserves 13 3,339,601 2,872,791 3,939,601 3,472,791Accumulated losses 14 (22,827,715) (23,847,593) (18,698,282) (20,962,493)

Total equity 95,855,932 47,628,088 100,585,365 51,113,188


page 39

Statement of Changes in Equity

AS AT 30 JUNE 2006

Issued General Share Accumulated Total Capital Reserve Options Losses Reserve $ $ $ $ $

BALANCE AT 1 JUL 04 68,568,240 2,809,287 - (22,977,181) 48,400,346

Loss for the period - - - (870,412) (870,412)Net income recognised directly in equity - - - - -

Total recognised income and expense for the year - - - (870,412) (870,412)

Share options exercised 34,650 - - - 34,650Cost of share based payments - - 63,504 - 63,504

BALANCE AT 01 JUL 05 68,602,890 2,809,287 63,504 (23,847,593) 47,628,088

Profi t for the period - - - 1,010,830 1,010,830Net income recognised directly in equity - - - - -

Total recognised income and expense for the year - - - 1,010,830 1,010,830

Share options exercised 339,183 - - - 339,183Cost of share based payments - - 475,858 - 475,858Placement of 75,000,000 shares @ 27.5p 46,401,973 - - 46,401,973Transfer to retained earnings - - (9,048) 9,048 -

BALANCE AT 30 JUN 06 115,344,046 2,809,287 530,314 (22,827,715) 95,855,932



Cash Flow Statement



CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 56,920 54,599 56,920 54,599Receipts from subsidiaries - - 1,196,597 538,934Payments to suppliers and employees (730,882) (1,598,837) (2,211,579) (1,473,840)Interest received 1,140,700 1,046,309 1,110,710 1,046,137

Net cash generated by/(used in) operating activities 21 466,738 (497,929) 152,648 165,830

CASH FLOWS FROM INVESTING ACTIVITIES Payment for plant and equipment (514,614) (1,184,490) (49,834) (46,910)Sale of plant and equipment - 930,439 - 30,778Advances to subsidiaries - - (13,223,591) (2,879,425)Payments for exploration & evaluation (12,858,833) (2,053,071) - -

Net cash used in investing activities (13,373,447) (2,307,122) (13,273,425) (2,895,557)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the conversion of options 339,183 34,650 339,183 34,650Proceeds from issues of shares 49,588,737 - 49,588,737 -Share issue costs (3,186,764) - (3,186,764) -

Net cash provided by fi nancing activities 46,741,156 34,650 46,741,156 34,650

Net increase/(decrease) in cash and cash equivalents 33,834,447 (2,770,401) 33,620,379 (2,695,077)Effect of exchange rate changes on the balance of cash held in foreign currencies 2,674,008 (468,087) 2,438,869 (499,263)Cash and cash equivalents at the beginningof the fi nancial year 17,984,972 21,133,460 17,907,208 21,101,548

Cash and cash equivalents at the end of the fi nancial year 21 54,493,427 17,984,972 53,966,456 17,907,208


page 41

1. Summary of Signifi cant Accounting Policies

Statement of ComplianceThe fi nancial report is a general purpose fi nancial report which has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and complies with other requirements of the law. Accounting Standards include Australian equivalents to International Financial Reporting Standards (“A-IFRS”). Compliance with the A-IFRS ensures that the consolidated fi nancial statements and notes of the consolidated entity comply with International Financial Reporting Standards (“IFRS”). The parent entity fi nancial statements and notes also comply with IFRS except for the disclosure requirements in IAS 132 “Financial Instruments: Disclosure and Presentation” as the Australian equivalent accounting standard, AASB 132 “Financial Instruments: Disclosure and Presentation” does not require such disclosures to be presented by the parent entity where its separate fi nancial statements are presented together with the consolidated fi nancial statements of the consolidated entity.

The fi nancial statements were authorised for issue by the directors on 21 September 2006.

(A) BASIS OF PREPARATION

This fi nancial report is denominated in Australian Dollars.

The fi nancial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and fi nancial instruments. Cost is based on the fair values of the consideration given in exchange for assets.

In the application of A-IFRS management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may different from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgments made by management in the application of A-IFRS that have signifi cant effects on the fi nancial statements and estimates with a signifi cant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the fi nancial statements.

Accounting policies are selected and applied in a manner which ensures that the resulting fi nancial information satisfi es the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.

The consolidated entity changed its accounting policies on 1 January 2005 to comply with A-IFRS. The transition to A-IFRS is accounted for in accordance with Accounting Standard AASB 1 “First-time Adoption of Australian Equivalents to International Financial Reporting Standards”, with 1 July 2004 as the date of transition. An explanation of how the transition from superseded policies to A-IFRS has affected the company’s and consolidated entity’s fi nancial position, fi nancial performance and cash fl ows is discussed in Note 33.

The accounting policies set out below have been applied in preparing the fi nancial statements for the year ended 30 June 2006, the comparative information presented in these fi nancial statements for the year ended 30 June 2005 (as disclosed in Note 33), the consolidated entity’s date of transition, except for the accounting policies in respect of fi nancial instruments. The consolidated entity has not restated comparative information for fi nancial instruments as permitted under the fi rst-time adoption transitional provisions. The accounting policies for fi nancial instruments applicable to the comparative information and the impact of changes in these accounting policies on 1 July 2005, the date of transition for fi nancial instruments is discussed further in Note 32.

The following signifi cant policies have been adopted in the preparation and presentation of the fi nancial report:

Notes to the Financial Statements



(B) ACCOUNTS PAYABLE

Trade payables and other accounts payable are recognised when the consolidated entity becomes obliged to make future payments resulting from the purchase of goods and services.

(C) DEBT AND EQUITY INSTRUMENTS ISSUED BY THE COMPANY

Debt and equity instruments are classifi ed as either liabilities or as equity in accordance with the substance of the contractual arrangement.

(D) EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE

Exploration and evaluation expenditures in relation to each separate areas of interest, are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfi ed:i) the rights to tenure of the area of interest are current; andii) at least one of the following conditions is also met:

a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale: orb) exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and signifi cant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploration drilling, trenching and sampling and associated activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest.

Exploration and evaluation assets are assessed for impairment when facts and circumstances (as defi ned in AASB 6 “Exploration for and Evaluation of Mineral Resources”) suggest that the carrying amount of exploration and evaluation assets may exceed its recoverable amount. The recoverable amount of the exploration and evaluation assets (or the cash-generating unit(s) to which it has been allocated, being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years.

Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment, reclassifi ed to development properties, and then amortised over the life of the reserves associated with the area of interest once mining operations have commenced.

(E) FOREIGN CURRENCY

All foreign currency transactions during the period have been brought to account using the exchange rate in effect at the date of the transaction. Foreign currency monetary items at balance date are translated at the exchange rate existing at that date.

Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. All exchange differences are brought to account in the consolidated income statement in the fi nancial period in which they arise.

(F) GOODS AND SERVICES TAX

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:i. Where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; orii. For receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.



page 43

(G) IMPAIRMENT OF ASSETS (OTHER THAN EXPLORATION AND EVALUATION)

At each reporting date, the consolidated entity reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash fl ows that are independent from other assets, the consolidated entity estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessment of the time value of money and the risks specifi c to the asset for which the estimates of future fl ows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. Each cash generated unit is determined on an area of interest basis.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash generating unit) in prior years.

(H) INVESTMENTS

Investments in subsidiaries are carried in the company’s separate fi nancial statements at cost less impairment.

(I) LOANS AND RECEIVABLES

Trade receivables, loans, and other receivables are recorded at amounts due less any allowance for doubtful debts.

(J) PLANT AND EQUIPMENT

Plant and equipment, and equipment under fi nance lease are stated at cost less accumulated depreciation and impairment. Plant and equipment will include capitalised development expenditure. Cost includes expenditure that is directly attributable to the acquisition of the item as well as the estimated cost of abandonment. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition.

Depreciation is provided on property, plant and equipment. Depreciation of capitalised development expenditure will be provided on a unit of production basis over recoverable reserves, whilst on other fi xed assets are calculated on a straight line basis so as to write off the net cost or other re-valued amount of each asset over its expected useful life to its estimated residual value.

The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period.

The following estimated useful lives are used in the calculation of depreciation:

Plant & Equipment & Offi ce Furniture - 4-10 yearsMotor Vehicles - 2 -8 years

(K) PRINCIPLES OF CONSOLIDATION

The consolidated fi nancial statements are prepared by combining the fi nancial statements of all the entities that comprise the consolidated entity, being the company (the parent entity) and its subsidiaries as defi ned in Accounting Standard AASB 127 “Consolidated and Separate Financial Statements”. Consistent accounting policies are employed in the preparation and presentation of the consolidated fi nancial statements.

The consolidated fi nancial statements include the information and results of each subsidiary from the date on which the company obtains control and until such time as the company ceases to control such entity.

In preparing the consolidated fi nancial statements, all intercompany balances and transactions, and unrealised profi ts arising within the consolidated entity are eliminated in full.




(L) REVENUE RECOGNITION

Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the fi nancial asset.

(M) SHARE-BASED PAYMENTS

Employee share options that vested before 1 January 2005 have not been expensed. The shares are recognised when the options are exercised and the proceeds are allocated to share capital.

Equity-settled share-based payments granted after 7 November 2002 that were vested on or after 01 January 2005, are measured at fair value at the date of grant. Fair value is measured under the Black and Scholes model. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the consolidated entity’s estimate of shares that will eventually vest.

(N) SUPERANNUATION FUND

The Company contributes to, but does not participate in, compulsory superannuation funds on behalf of the Employees and Directors in respect of salaries and directors’ fees paid. Contributions are charged against income as they are made.

(O) TAXATION

Current taxCurrent tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profi t or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).

Deferred taxDeferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the fi nancial statements and the corresponding tax base of those items.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that suffi cient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profi t.

Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the company/consolidated entity intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the periodCurrent and deferred tax is recognised as an expense or income in the income statement, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess.

Tax ConsolidationThe Company and all its wholly-owned Australian resident entities are part of a tax-consolidated group under Australian taxation law. Centamin Egypt Limited is the head entity in the tax-consolidated group. Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in the separate fi nancial statements of the members of the tax-consolidated group using the “separate taxpayer within group” approach. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and tax credits of the members of the tax-consolidated group are recognised by the company (as the head entity in the tax-consolidated group).



page 45

Due to the existence of a tax funding arrangement between the entities in the tax-consolidated group, amounts are recognised as payable to or receivable by the company and each member of the group in relation to the tax contribution amounts paid or payable between the parent entity and the other members of the tax-consolidated group in accordance with the arrangement. Further information about the tax funding arrangement is detailed in note 3 to the fi nancial statements. Where the tax contribution amount recognised by each member of the tax-consolidated group for a particular period is different to the aggregate of the current tax liability or asset and any deferred tax asset arising from unused tax losses and tax credits in respect of that period, the difference is recognised as a contribution to (or distribution to) equity participants.

Consolidated Company 2006 2005 2006 2005 $ $ $ $

2. Profi t/(Loss) Before Income Tax

Profi t/(Loss) has been arrived at after including: OPERATING REVENUE Interest revenue 1,140,700 1,046,309 1,110,710 1,046,137Administration & management fees - Other entities in the wholly-owned group - - 1,196,597 538,934Other income - 102,351 - -

1,140,700 1,148,660 2,307,307 1,585,071Foreign exchange rate gain/(loss) 2,011,921 (543,942) 2,065,253 (562,767)

3,152,621 604,718 4,372,560 1,022,304

OPERATING EXPENSES Total employee benefi t expense 1,461,487 1,405,155 410,941 75,560Depreciation of non-current assets 622,592 88,870 23,482 22,260Offi ce lease payments 73,269 51,212 53,055 51,212Allowance for doubtful debts - - 4,500 3,870Loss on deconsolidation of PGML* - 102,351 - -

* On 30 May 2005, Centamin Limited sold the shares in Pharaoh Gold Mines Limited (“PGML”) to a third party for US$120.00 cash. The Consolidated entity recognised a loss of $102,341 on deconsolidation. PGML had only one asset at the date of sale, a bank account with a cash balance of US$1,345.30.

3. Taxation

(a) Income tax expense

Current tax expense/(income) (155,971) (89,233) (173,022) (136,310)Deferred tax expense/(income) relating to the origination and reversal of temporary differences (458,030) 180,351 (792,321) 112,525Benefi ts arising from previously unrecognised tax losses, tax credits or temporary differences not recognised 614,001 (91,118) 965,343 23,785

Total tax expense/(income) - - - -

Income tax expense/(income) attributable to loss from continuing operations - - - -





The prima facie income tax expense/(benefi t) on the profi t/loss before income tax reconciles to the income tax in the fi nancial statements as follows:

Profi t/(Loss) before income tax 1,010,830 (870,412) 2,255,163 (494,301)

Tax expense/(income) calculated at 30% of Profi t/(Loss) before income tax (2005 30%) 303,249 (261,124) 676,549 (148,290) Tax effect of amounts which are not deductible/taxable in calculating taxable income: Non-deductible expenses 310,752 170,006 288,794 172,075Unused tax losses and tax offsets not recognised as deferred tax assets (614,001) 91,118 (965,343) (23,785)

Tax (expense)/income - - - -

The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profi ts under the Australian tax law. There has been no change in the corporate tax rate when compared to the previous reporting period.

(b) Income tax recognised directly in equity

Current and deferred amounts were chargeddirectly to equity during the period - - - -

(c) Current tax liabilities

Current tax payable to parent entity - - - -

Total - - - -

Unrecognised deferred tax balances

The following deferred tax assets have not been brought to account as assets: Tax Losses - revenue 6,287,519 5,767,703 6,287,519 5,767,703Tax Losses – capital 600,000 600,000 600,000 600,000Temporary Differences 6,415,865 3,718,117 6,410,865 3,763,117

13,303,384 10,085,820 13,298,384 10,130,820

TAX CONSOLIDATION

Relevance of tax consolidation to the consolidated entityThe company and its wholly-owned Australian resident entities have formed a tax-consolidated group with effect from 1 July 2003. The head entity within the tax-consolidated group is Centamin Egypt Limited. The members of the tax-consolidated group are identifi ed at note 20.



page 47

Nature of tax funding arrangements and tax sharing agreementsEntities within the tax-consolidated group have entered into a tax funding arrangement and a tax-sharing agreement with the head entity. Under the terms of the tax funding agreement, Centamin Egypt Limited and each of the entities in the tax-consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on the current tax liability or current tax asset of the entity. Such amounts are refl ected in amounts receivable from or payable to other entities in the tax-consolidated group.

The tax sharing agreement entered into between members of the tax-consolidated group provides for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the fi nancial statements in respect of this agreement as payment of any amounts under the tax sharing agreement is considered remote.

4. Segment Reporting

Primary reporting - Business Segments

The economic entity is engaged in the business of exploration for precious and base metals only, which is characterised as one business segment only. As the economic entity has only one business segment, all the necessary reporting disclosures are disclosed elsewhere in the notes to the fi nancial statements.

Secondary reporting - Geographical Segments

The principal activity of the economic entity during the year was the exploration for precious and base metals in Egypt.


5. Trade and other receivables

CURRENT Other Receivables 104,401 280,748 100,982 202GST receivable 78,603 17,370 13,261 8,754

183,004 298,118 114,243 8,956NON-CURRENT Loans and advances to subsidiaries - - 43,775,219 30,547,129Less: Allowance for doubtful debts - - (3,040,239) (3,035,739)

- - 40,734,980 27,511,390

The loans to controlled entities are amounts that have been advanced for expenditure on exploration, prospecting and development activities.

6. Prepayments

CURRENT

Other 113,399 114,527 28,206 22,206




Plant, Equipment Motor Vehicles Total & Offi ce Furniture $ $ $7. Plant and Equipment

CONSOLIDATED Gross Carrying Amount Balance at 30 June 2005 1,846,037 284,943 2,130,980Additions 193,825 320,788 514,613Disposals - - -

Balance at 30 June 2006 2,039,862 605,731 2,645,593

Accumulated Depreciation Balance at 30 June 2005 (822,381) (130,520) (952,901)Depreciation expense (472,448) (150,143) (622,591)Disposals - - -

Balance at 30 June 2006 (1,294,829) (280,663) (1,575,492)

Net Book ValueAs at 30 June 2005 1,023,656 154,423 1,178,079

As at 30 June 2006 745,033 325,068 1,070,101

COMPANY Gross Carrying Amount Balance at 30 June 2005 441,695 32,727 474,422Additions 49,835 - 49,835Disposals - - -

Balance at 30 June 2006 491,530 32,727 524,257

Accumulated DepreciationBalance at 30 June 2005 (411,495) (5,692) (417,187)Depreciation expense (16,118) (7,364) (23,482)Disposals - - -

Balance at 30 June 2006 (427,613) (13,056) (440,669)

Net Book ValueAs at 30 June 2005 30,200 27,035 57,235

As at 30 June 2006 63,917 19,671 83,588


Aggregate depreciation allocated, whether recognised as an expense or capitalised as part of the carrying amount of other assets during the year:

Plant, equipment and offi ce furniture 472,448 61,227 16,118 16,568Motor vehicles 150,143 27,643 7,364 5,692

622,591 88,870 23,482 22,260

Included above, the following amounts were capitalised within exploration expenditure: 413,029 - - -



page 49


8. Investments

NON CURRENT Shares in subsidiaries - - 5,959,455 5,959,455Recoverable amount write down - - (448,286) (448,286)

- - 5,511,169 5,511,169

9. Exploration and Evaluation Expenditure

Exploration and evaluation expenditure

(a) At Cost

Balance at the beginning of the year 28,715,883 26,662,812 - -Expenditure for the year 12,341,933 1,722,250 - -Take up joint venture assets 330,821 330,821 330,821 330,821

Balance at the end of the year 41,388,637 28,715,883 330,821 330,821

(b) Included within the cost amount of assets is $5,311,744 being the excess of consideration over the net tangible assets acquired on the acquisition of Pharaoh Gold Mines NL in January 1999. This amount has been treated as part of the cost of exploration and evaluation. Management believe that the recovery of these amounts will satisfactorily be made through the exploitation of the project in due course.

10. Trade and other Accounts Payable

CURRENT Trade payables 216,087 214,151 43,763 7,094Other creditors and accruals - director personally related entities - - - -Other creditors and accruals 645,172 18,398 97,888 62,654

861,259 232,549 141,651 69,748

NON-CURRENT Other creditors and accruals * 205,448 196,850 - -

205,448 196,850 - -

* This represents a loan of US$150,000 payable 14 days after commencement of commercial production. There is no interest payable.

11. Current Provisions

CURRENT

Employee Benefi ts

Balance at 1 July 2005 234,092 168,869 166,049 84,945

Additional provision recognised 275,387 130,986 59,222 135,686

Reductions due to payment* (183,550) (65,763) (182,824) (54,582)

Balance at 30 June 2006 325,929 234,092 42,447 166,049

* Note that J El-Raghy’s annual and sick leave entitlements were transferred from Centamin to PGM during the year.





12. Contributed Equity

Balance at beginning of fi nancial year 68,602,890 68,568,240 68,602,890 68,568,240

Exercise of options issued under the Employee Share Option Plan - 150,000 @ 23.10 cents - 34,650 - 34,650 - 640,000 @ 23.10 cents 147,840 - 147,840 - 250,000 @ 29.00 cents 72,500 - 72,500 - 50,000 @ 35.00 cents 17,500 - 17,500 - 45,000 @ 28.04 cents 12,618 - 12,618 - 250,000 @ 35.49 cents 88,725 - 88,725

Placement of 75,000,000 shares @ 27.5p 46,401,973 - 46,401,973

Balance at end of fi nancial year 115,344,046 68,602,890 115,344,046 68,602,890

2006 2005 No. $ No. $

Fully Paid Ordinary Shares

Balance at beginning of fi nancial year 502,060,369 68,602,890 501,910,369 68,568,240

Exercise of options issued under the Employee Share Option Plan - @ 23.10 cents 640,000 147,840 150,000 34,650 - @ 29.00 cents 250,000 72,500 - - - @ 35.00 cents 50,000 17,500 - - - @ 28.04 cents 45,000 12,618 - - - @ 35.49 cents 250,000 88,725 - -

Placement of 75,000,000 shares @ 27.5p 75,000,000 46,401,973 - -

Balance at end of fi nancial year 578,295,369 115,344,046 502,060,369 68,602,890

Fully paid ordinary shares carry one vote per share and carry the right to dividends.

Unlisted Employee Unlisted Employee Options 2006 Options 2005 No. No.

Options Balance at beginning of year 3,325,000 5,290,000Issued during the year 5,750,000 1,185,000Exercised during the year (1,235,000) (150,000)Lapsed/Expired during the year - (3,000,000)

Balance at end of year 7,840,000 3,325,000



page 51

The details of these options are as follows:-

i) Balance at beginning of the fi nancial year

Options - Series Number Grant DateExpiry/

Exercise DateExercise Price

$Issued 11 November 2003 250,000 11 November 2003 11 November 2005 0.2900

Issued 12 November 2003 1,010,000 12 November 2003 12 November 2006 0.2310

Issued 17 November 2003 130,000 17 November 2003 17 November 2006 0.2310

Issued 15 December 2003 750,000 15 December 2003 15 December 2006 0.3549

Issued 04 February 2005 775,000 04 February 2005 04 February 2008 0.2804

Issued 17 February 2005 410,000 17 February 2005 17 February 2008 0.2804Total number of options 3,325,000

ii) Granted during the fi nancial year



$Issued 31 October 2005 4,250,000 31 October 2005 31 October 2010 0.3500

Issued 08 December 2005 1,500,000 08 December 2005 08 December 2008 0.4355Total 5,750,000

The options have been received for nil consideration and are unvested at the end of the year.

iii) Lapsed during the fi nancial year

There were no options that lapsed or expired during the fi nancial year.

iv) Exercised during the fi nancial year



$Issued 11 November 2003 250,000 11 November 2003 11 November 2005 0.2900



Issued 15 December 2003 250,000 15 December 2003 15 December 2006 0.3549

Issued 17 February 2005 45,000 17 February 2005 17 February 2008 0.2804

Issued 31 October 2005 50,000 31 October 2005 31 October 2010 0.3500Total 1,235,000

The weighted average share price during the fi nancial year was $0.5392.

v) Balance at 30 June 2006



$Issued 12 November 2003 (1) 500,000 12 November 2003 12 November 2006 23.10

Issued 15 December 2003(1) 500,000 15 December 2003 15 December 2006 35.49

Issued 04 February 2005(1) 775,000 04 February 2005 04 February 2008 28.04

Issued 17 February 2005(1) 365,000 17 February 2005 17 February 2008 28.04

Issued 31 October 2005(2) 4,200,000 31 October 2005 31 October 2010 35.00

Issued 08 December 2005(1) 1,500,000 08 December 2005 08 December 2008 43.55Total number of options 7,840,000

(1) These options vest and are exercisable over a period of 12 months, with 50% vesting and exercisable after 6 months and the other 50% vesting and exercisable after 12 months of issue. These options have a term of 3 years.

(2) i) 2,500,000 of these options are subject to performance based hurdles. 500,000 of the 2,500,000 options may only be exercised after the completion of the bankable feasibility study and subsequent bank fi nance approval. A further 1,000,000 options may be exercised on completion of construction and the remaining 1,000,000 options may be exercised following the fi rst gold pour from the Sukari Gold Project. The options have a term of 5 years.

ii) 1,000,000 of these options vest and are exercisable over a period of two years, with 50% vesting and exercisable after 12 months and the other 50% vesting and exercisable after 24 months of issue. These options have a term of 5 years.

iii) 700,000 of these options vest and are exercisable immediately. These have a term of 5 years.





13. Reserves

Option reserve 2,273,713 2,273,713 2,273,713 2,273,713

Reserve created from the issuing of options for consideration. Balance at the end of the year

Asset realisation reserve 535,574 535,574 535,574 535,574

Reserve created from the realisation of particular assets.

Capital reserve - - 600,000 600,000

Reserve created from the cancellation of shares in the Company held by Pharaoh Gold Mines NL.Share option reserve Balance at beginning of fi nancial year 63,504 - 63,504 -Cost of share based payments 475,858 63,504 475,858 63,504Transfer to retained earnings (9,048) - (9,048) -

Balance at end of fi nancial year 530,314 63,504 530,314 63,504

Reserve created on the granting of share options to employees.*

3,339,601 2,872,791 3,939,601 3,472,791

* The share option reserve arises on the grant of share options to employees under the employee share option plan. Amounts are transferred out of the reserve and into issued capital when the options are exercised.

There is currently no formal policy for realisation of the reserves.

14. Accumulated Losses

Balance at the beginning of the year 23,847,593 22,977,181 20,962,493 20,468,192Current year’s (profi t)/loss (1,010,830) 870,412 (2,255,163) 494,301Transfer from share option reserve (9,048) - (9,048) -

Balance at the end of the year 22,827,715 23,847,593 18,698,282 20,962,493

15. Employee Benefi ts

The aggregate employee benefi t liability recognised and included in the fi nancial statements is as follows: Provision for employee benefi ts: Current (note 11) 325,929 234,092 42,447 166,049

Consolidated Company 2006 2005 2006 2005 No. No. No. No.

16. Number of Employees

Number of Employees 92 93 3 5



page 53

17. Contingent Liabilities

There are no contingent liabilities to report as at 30 June 2006.


18. Commitments for Expenditure

Lease of offi ce premisesNot longer than 1 year 53,580 52,005 53,580 52,005Longer than 1 year and not longer than 5 years 22,325 73,674 22,325 73,674Longer than 5 years - - - -

Total 75,905 125,679 75,905 125,679

On 05 July 2004, the Company exercised its option to extend the Term of the offi ce lease for an additional 3 years expiring on 22 November 2007. The rent is increased by CPI annually on the anniversary of the original lease (22 November 2001).

19. Net Assets of the Group

The net asset position of the group is lower than that of the Company. This position is a result of fees being charged to the subsidiary through the inter-company account which are expensed within the subsidiary. Management believe that it would be misleading to impair the inter-company receivable. Management believe that the recovery of these amounts will satisfactorily be made through the exploitation of the project in due course.

20. Particulars in Relation to Subsidiaries

Country of Ownership Interest Incorporation 2006 2005

PARENT ENTITY % %Centamin Egypt Limited Australia

SUBSIDIARIES Viking Resources Limited Australia 100 100North African Resources NL Australia 100 100Pharaoh Gold Mines NL Australia 100 100Centamin Limited Bermuda 100 100

21. Notes to the Statements of Cash Flows

(a) Reconciliation of cash and cash equivalents

For the purposes of the Cash Flow Statement, cash includes cash on hand and at bank and deposits. Cash and cash equivalents as at the end of the fi nancial year as shown in the Cash Flow Statement is reconciled to the related item in the balance sheet as follows:


Cash and cash equivalents 54,493,427 17,984,972 53,966,456 17,907,208




(b) Reconciliation of profi t/(loss) from ordinary activities to net cash generated by/(used in) operating activities


Profi t/(Loss) from ordinary activities before income tax 1,010,830 (870,412) 2,255,163 (494,301)Add/(less) non-cash items: Depreciation of non-current assets 622,592 88,870 23,482 22,260Foreign exchange rate (gain)/loss (2,011,921) 543,942 (2,065,253) 562,767Changes in assets and liabilities duringthe year: Decrease/(increase) in receivables 115,061 (267,860) (105,340) 19,949Decrease/(increase) in prepayments 1,128 36,873 (6,000) 223Increase/(decrease) in trade creditors & accruals 729,048 (29,342) 50,596 54,932

Net cash generated by/(used in) operating activities 466,738 (497,929) 152,648 165,830

22. Related Parties

a) Equity interests in related parties

Equity interests in subsidiariesDetails of the percentage of ordinary shares held in subsidiaries are disclosed in note 20 to the fi nancial statements.

Equity interests in associates and joint venturesDetails of interests in associates and joint ventures are disclosed in note 28 to the fi nancial statements.

b) Key management personnel compensation

Details of key management personnel compensation are disclosed in note 23 to the fi nancial statements.

c) Key management personnel equity holdings

The details of the movement in key management personnel equity holdings during the fi nancial year are as follows:-

Key Management Personnel

2006Balance at 01 July 05

Grantedas

remuneration

Received on exercise of options

Net other change

Balance at 30 June 06

Balance held nominally

S El-RaghyChairman 78,235,754 - - - *78,235,754 -

C CowdenNon-executive Director 273,026 - 250,000 - 523,026 -

J El-RaghyManaging Director/CEO 79,185,754 - - - *79,185,754 -

H BottomleyNon-executive Director 2,800,000 - - - 2,800,000 200,000

H BrownCompany Secretary - - 100,000 - 100,000 -

*The total shares held by Mr S El-Raghy and Mr J El-Raghy arise due to them both being directors/trustees of the following personally related entities: - Nordana Pty Ltd 4,990,668 shares- Nordana Pty Ltd <Super Fund A/C> 17,595,714 shares- El-Raghy Kriewaldt Pty Ltd 55,299,372 shares- S & M El-Raghy <The El-Raghy Family Account> 350,000 sharesThe balance of 950,000 shares are held by Mr J El-Raghy being a director of Montana Realty Pty Ltd <Super Fund A/C>



page 55


2005Balance at 01 July 04

Grantedas

remuneration

Received on exercise of options

Net other change


Balance held nominally

S El-RaghyChairman 78,235,754 - - - *78,235,754 -

C CowdenNon-executive Director 223,026 - - 50,000 273,026 -

J El-RaghyManaging Director/CEO 79,185,754 - - - *79,185,754 -

M LynchOffi ce Manager 505,000 - - - 505,000 50,000

M KriewaldtExploration 1,963,333 - - - 1,963,333 -

*The total shares held by Mr S El-Raghy and Mr J El-Raghy arise due to them both being directors/trustees of the following personally related entities: - Nordana Pty Ltd 4,990,668 shares- Nordana Pty Ltd <Super Fund A/C> 17,595,714 shares- El-Raghy Kriewaldt Pty Ltd 55,299,372 shares- S & M El-Raghy <The El-Raghy Family Account> 350,000 sharesThe balance of 950,000 shares are held by Mr J El-Raghy being a director of Montana Realty Pty Ltd <Super Fund A/C>

The details of the movement in key management personnel options to acquire ordinary shares are as follows:

2006


Balance at 01 July 05

Granted as remuneration Exercised

Other changes -lapsed


Balance Vested at

30 June 2006S El-Raghy - - - - - -

C Cowden 250,000 500,000 250,000 - 500,000 250,000G Speechly 250,000 - - - 250,000 250,000T Elder 250,000 500,000 - - 750,000 500,000J El-Raghy - - - - -H Bottomley 500,000 - - 500,000 250,000H Brown 300,000 - 100,000 - 200,000 200,000W Foote - 2,500,000 - - 2,500,000 -Total 1,050,000 4,000,000 350,000 - 4,700,000 1,450,000

2005


Balance at 01 July 04

Granted as remuneration Exercised

Other changes -lapsed


BalanceVested at

30 June 2005S El-Raghy - - - - - -

C Cowden 250,000 - - - 250,000 250,000G Speechly 250,000 - - - 250,000 250,000T Elder 250,000 - - - 250,000 250,000J El-Raghy - - - - - -H Michael 3,000,000 - - (3,000,000) - -M Lynch 250,000 100,000 - - 350,000 250,000D Franks 100,000 100,000 - - 200,000 100,000H Brown 100,000 200,000 - - 300,000 100,000C Tyndall 100,000 - - - 100,000 100,000Total 4,300,000 400,000 - (3,000,000) 1,700,000 1,300,000

Apart from the details disclosed in this note, no key management personnel has entered into a material contract with the Company or the economic entity since the end of the previous fi nancial year and there were no material contracts involving key management personnel interests at year-end.




During the fi nancial year, 350,000 options (2005: Nil) were exercised by key management personnel. C Cowden exercised 250,000 options at a price of $0.3549 per share for 250,000 ordinary shares in Centamin Egypt Limited and H Brown exercised 100,000 options at a price of $0.2310 per share for 100,000 ordinary shares in Centamin Egypt Limited. No amounts remain unpaid on the options exercised during the fi nancial year at year end. Further details of share options granted during the fi nancial year are contained in Notes 24-26 of the fi nancial statements.

OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL

Mr S El-Raghy and Mr J El-Raghy are also directors and shareholders of El-Raghy Kriewaldt Pty Ltd (“El-Raghy Kriewaldt”). El-Raghy Kriewaldt provides offi ce premises to the Company. All dealings with El-Raghy Kriewaldt are in the ordinary course of business and on normal terms and conditions. Rent and offi ce outgoings paid to El-Raghy Kriewaldt during the year were $53,055 (2005: $51,612). Refer to Note 18 for commitments for expenditure and leasing arrangements.

Mr S El-Raghy provides offi ce premises in Alexandria, Egypt to the Company. All dealings with Mr S El-Raghy are in the ordinary course of business and on normal terms and conditions. Rent and offi ce outgoings paid to Mr S El-Raghy during the year were $20,214 (2005: $Nil).

A director of the Company, Mr C Cowden has an interest as a director and controlling shareholder of Cowden Limited, Insurance Brokers. This Company provides insurance broking services to the Company. All dealings with this Company are in the ordinary course of business and on normal terms and conditions. Premiums paid to Cowden Limited during the year were $73,212 (2005: $36,397), of which $7,567 was brokerage (2005: $5,357).

TRANSACTIONS WITH OTHER RELATED PARTIES

During the year the Company provided funds to and received funding from subsidiaries. Refer to Notes 5 and 10 for details.

23. Key Management Personnel Compensation

The key management personnel of Centamin Egypt Limited during the fi nancial year were:

- Mr Sami El-Raghy (Chairman), appointed 29 April 1993;

- Mr Josef El-Raghy (Managing Director/CEO), appointed 26 August 2002;

- Dr Thomas G Elder (Non-Executive Director) appointed 08 May 2002;

- Mr Colin Cowden (Non-Executive Director) appointed 08 March 1982;

- Mr G Brian Speechly (Non-Executive Director), appointed 15 August 2000;

- Mr H Stuart Bottomley (Non-Executive Director), appointed 26 September 2005;

- Mrs Heidi Brown (Company Secretary), appointed 21 July 2004; and

- Mr Wayne Foote (Project Manager), appointed 13 October 2005.

(a) Key Management Personnel Compensation

The Board reviews the remuneration packages of all key management personnel on an annual basis. Compensation packages are reviewed and determined with due regard to current market rates and are benchmarked against comparable industry salaries, adjusted by a performance factor to refl ect changes in the performance of the Company.

Options are issued to key management personnel under the Employee Share Option Plan 2002 as part of their remuneration. Options are offered to key management personnel at the discretion of the Directors, having regard, among other things, to the length of service with the Group, the past and potential contribution of the person to the Group and in some cases, performance.



page 57

During the fi nancial year, W Foote was issued 2,500,000 options at an exercise price of $0.3500. These options are subject to performance based hurdles. 500,000 of the 2,500,000 options may only be exercised after the completion of the bankable feasibility study and subsequent bank fi nance approval. A further 1,000,000 options may be exercised on completion of construction and the remaining 1,000,000 options may be exercised following the fi rst gold pour from the Sukari Gold Project. The options have a term of fi ve years. These performance conditions were chosen as they refl ect the key objectives of W Foote’s role as project manager.

The aggregate compensation of the key management personnel of the consolidated entity and the company is set out below:-


Short-term employee benefi ts 1,245,091 1,261,636 283,861 735,209Post-employment benefi ts 44,538 67,959 15,190 67,959Other long-term benefi ts - - - -Termination benefi ts - - - -Share-based payments 171,858 75,560 111,890 75,560

Total 1,461,487 1,405,155 410,941 878,728

The compensation of each member of the key management personnel of the consolidated entity is set out below:-

2006


benefi tsOther


$

Termina-tion

benefi ts$

Share-based payment

Total$

Equity-settled

Cash settled

$Other

$

Salary& Fees

$Bonus

$

Non-monetary

$Other

$

Super-annuation

$Other

$

Shares & units

$

Options & rights

$

S El-Raghy* 357,353 - - - - - - - - - - - 357,353

J El-Raghy* 303,609 - 24,978 - 2,860 - - - - - - - 331,447

T Elder* 49,167 - - - - - - - - 31,868 - - 81,035

C Cowden 25,000 - - - 2,250 - - - - 31,868 - - 59,118

G B Speechly 25,000 - - - 2,250 - - - - - - - 27,250

H Bottomley* 44,107 - - - - - - - - 31,868 - - 75,975

W Foote(1) 326,087 - 2,790 - 29,348 - - - - 59,968 - - 418,193

H Brown***(1) 67,000 20,000 - - 7,830 - - - - 16,286 - - 111,116

Total 1,197,323 20,000 27,768 - 44,538 - - - - 171,858 - - 1,461,487

* Non-resident directors** Options value as per Black Scholes pricing method. Refer to Notes 12, 24 and 25 for further details of options granted.*** Bonus paid in respect to added responsibilities and represents 18% of total remuneration.(1) The total value of options issued during the year to Mr T Elder, Mr C Cowden and Mr G B Speechly is $74,768 each. See Note 12 for terms and conditions.(2) The total value of the options granted to W Foote during the fi nancial year totalled $437,159. See Note 12 for terms and conditions.




2005


benefi tsOther


$

Termina-tion

benefi ts$

Share-based payment

Total$

Equity-settled

Cash settled

$Other

$

Salary& Fees

$Bonus

$

Non-monetary

$Other

$

Super-annuation

$Other

$

Shares & units

$

Options & rights

$

S El-Raghy* 376,283 150,000 144 - - - - - - - - - 526,427

J El-Raghy 224,808 - 20,449 - 22,481 - - - - - - - 267,738

T Elder* 49,580 - - - - - - - - 9,573 - - 59,153

C Cowden 25,000 - - - 2,250 - - - - 9,573 - - 36,823

G B Speechly 25,000 - - - 2,250 - - - - 9,573 - - 36,823

H Michael**** 89,856 - - - 8,986 - - - - - - - 98,842

M J Lynch 74,489 - - - 10,571 - - - - 16,851 - - 101,911

D Franks 87,599 - - - 16,588 - - - - 9,997 - - 114,184

M Kriewaldt 69,000 - - - - - - - - - - 69,000

H Brown 51,596 - - - 4,644 - - - - 15,425 - - 71,665

C Tyndall ***** 17,832 - - - 189 - - - - 4,568 - - 22,589

Total 1,091,043 150,000 20,593 - 67,959 - - - - 75,560 - - 1,405,155

* Non-resident directors** Options value as per Black Scholes pricing method. Refer to Notes 12, 24 and 25 for further details of options granted. *** Bonus paid in respect to performance and represents 28.5% of total remuneration.**** Mr Michael ceased employment with the Company on 26 November 2004. ***** Mrs Tyndall ceased employment with the Company on 19 July 2004. (1) The total value of options granted to key management personnel during the year ending 30 June 2005 totalled $54,287. The total value of M J Lynch’s options was $13,572, D W Franks’ was $13,572 and H Brown’s was $27,143.

The share options granted to key management personnel have been valued internally by the Company using the Black-Scholes option pricing method. Options are offered to key management personnel at the discretion of the Directors, having regard, among other things, to the length of service with the Group, and to the past and potential contribution of the person to the Group, and the number of options granted is at the Directors discretion. The weighted average closing price of the shares in Centamin Egypt Limited for the fi nancial year was $0.5392. The volatility input into the model was 60% and the government rate similar to the term of the option used was 5.25%.

The Employee Share Option Plan 2002 was approved by shareholders on 29 November 2002. Each option converts into one ordinary share of Centamin Egypt Limited on exercise. No amounts are paid or payable by the recipient of the option until exercise and options may be exercised at any time from the date of vesting to the date of their expiry.

(b) Contracts for services of key management personnel

The Board reviews the remuneration packages of all key management personnel on an annual basis. Compensation packages are reviewed and determined with due regard to current market rates and are benchmarked against comparable industry salaries, adjusted by a performance factor to refl ect changes in the performance of the Company.

S El-Raghy, J El-Raghy, W Foote and H Brown are employed under formal employment contracts. S El-Raghy’s current contract does not specify a term, J El-Raghy’s current contract specifi es a term of 3 years (expiring 01 September 2008), and W Foote’s current contract specifi es a term of 1 year (expiring 13 October 2006). These 3 contracts require a period of 3 months notice to terminate the contract. H Brown’s contract has no specifi ed term, and a period of 1 months notice is required to terminate the contract. No key management personnel is entitled to any termination payments apart from remuneration payable up to and including the date of termination and all payments due by way of accrued leave.



page 59

24. Options granted to Directors

The unquoted options granted to Directors during the fi nancial year were:-

NameIssue Date

Number of Unquoted Options

Exercise Price

Expiry Date

Dr T Elder 08 December 2005 500,000 $0.4355 08 December 2008

Mr C Cowden 08 December 2005 500,000 $0.4355 08 December 2008

Mr H S Bottomley 08 December 2005 500,000 $0.4355 08 December 2008

25. Options granted to Executives

The unquoted options granted to Executives during the fi nancial year were:-

NameIssue Date

Number of Unquoted Options

Exercise Price

Expiry Date

Mr W Foote 31 October 2005 2,500,000 $0.3500 31 October 2010

26. Options granted to Employees

At the Annual General Meeting on 29 November 2002, shareholders approved the Employee Option Plan 2002. To date, the following unquoted options have been issued under the Employee Option Plan:-

Number of Unquoted Options Issue Date Exercise Price Expiry Date

Number of Employees

1,160,000 12 November 2003 23.10 cents 12 November 2006 18

130,000 17 November 2003 23.10 cents 17 November 2006 3

750,000 15 December 2003 35.49 cents 15 December 2006 3

775,000 04 February 2005 28.04 cents 04 February 2008 10

410,000 17 February 2005 28.04 cents 17 February 2008 10

1,500,000 08 December 2005 43.55 cents 08 December 2008 3

4,250,000 31 October 2005 35.00 cents 31 October 2010 3

250,000 30 August 2006 65.66 cents 30 August 2009 1

Further details are contained in Note 12.


27. Auditors’ Remuneration

Auditing the fi nancial report 36,800 32,000 31,000 27,000Other services – Tax 4,700 - 4,700 -Other auditors 4,056 - - -

45,556 32,000 35,700 27,000

The auditor of Centamin Egypt Limited is Deloitte Touche Tohmatsu. The Egyptian expenditure is audited by Mostafa Shawki & Co in Egypt. Mostafa Shawki & Co do not provide any other services to the Company or its subsidiaries.




28. Interests in Joint Ventures

The consolidated entity has material interests in the following unincorporated venture:-

JOINTLY CONTROLLED ASSETS Principle Activites Percentage Interest 2006 2005 % %

Egyptian Pharaoh Investments Exploration 50 50Sukari Gold Mines Exploration 50 -

The following amount represents the economic entity’s interest in assets employed in the Egyptian Pharaoh Investments joint venture. The amount is included in the consolidated fi nancial statements under the respective category.

Consolidated & Company 2006 2005 $ $

Non Current Assets Exploration expenditure 330,821 330,821

The following amount represents the economic entity’s interest in assets employed in the Sukari Gold Mines joint venture. The amount is included in the consolidated fi nancial statements under the respective category.

Non Current Assets Exploration expenditure 24,151 -

29. Superannuation

The Company contributes to, but does not participate in, compulsory superannuation funds on behalf of its employees and Directors. Contributions are charged against income as they are made.

30. Earnings Per Share Consolidated 2006 2005 Cents Per Cents Per Share Share

Basic earnings per share 0.194 (0.16)Diluted earnings per share 0.192 (0.16)

Basic Earnings per ShareThe earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

2006 2005 $ $

Profi t/(Loss) (a) 1,010,830 (806,908)



page 61

2006 2005 No. No.

Weighted average number of ordinary shares (b) 520,213,903 501,961,547

(a) The Profi t/(Loss) used in the calculation of basic earnings per share equates to the Net Profi t/(Loss) in the Income Statement.

(b) The options are considered to be potential ordinary shares and are therefore excluded from the weighted average number of ordinary shares used in the calculation of basic earnings per share. Where dilutive, potential ordinary shares are included in the calculation of diluted earnings per share.

Diluted Earnings per Share

The earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows:

2006 2005 $ $

Profi t/(Loss) (a) 1,010,830 (806,908)

2006 2005 No. No.

Weighted average number of ordinary shares and potential ordinary shares (b) 525,611,917 501,961,547

(a) The Profi t/(Loss) used in the calculation of diluted earnings per share equates to the Net Profi t/(Loss) in the Income Statement.

(b) Weighted average number of ordinary shares for the purpose of diluted earnings per share reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows:-

2006 2005 No. No.

Weighted average number of ordinary shares used in the calculationof basic EPS 520,213,903 501,961,547

Shares deemed to be issued for no consideration in respect ofemployee options 5,398,014 -

Weighted average number of ordinary shares used in the calculation of diluted EPS 525,611,917 501,961,547

(c) The following potential ordinary shares are not dilutive and are therefore excluded from the weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted earnings per share:

2006 2005 No. No.

Options - 3,325,000




31. Events Subsequent to Balance Date

In July, the company announced that it is considering the purchase of used process plant items in an effort to reduce both the procurement time and the cost for major plant items. The search has identifi ed a recently closed operation that contains most of the process plant items that Centamin will require for the Sukari project.

The potential purchase of this plant represents an opportunity to materially reduce the cost of development and also accelerate the construction timetable. Testing of the structural integrity of key plant items has been arranged and negotiations with the plant owner are at an advanced stage. Consequently the completion of the Bankable Feasibility Study (BFS) will be delayed while a thorough review of this process plant is completed.

32. Financial Instruments

a) Interest Rate Risk

The following table details the consolidated entity’s exposure to interest rate risk as at reporting date:

2006

AverageInterest Rate %

VariableInterest

Rate$

FixedInterest Rate

(< 1 yr)$

Non Interest Bearing

$Total

$FINANCIAL ASSETSCash 5.04 3,344,983 50,632,885 480,787 54,458,655Receivables - - 183,057 183,057

3,344,983 50,632,885 663,844 54,641,712

FINANCIAL LIABILITIESAccounts payable - - 861,836 861,836Employee benefi ts - - 325,929 325,929

- - 1,187,765 1,187,7652005FINANCIAL ASSETSCash 5.36 1,663,921 16,270,838 50,213 17,984,972Receivables - - 298,118 298,118

1,663,921 16,270,838 348,331 18,283,090

FINANCIAL LIABILITIESAccounts payable - - 429,399 429,399

Employee benefi ts - - 234,092 234,092

- - 663,491 663,491

b) Credit Risk

Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in fi nancial loss to the economic entity. The economic entity has adopted a policy of only dealing with credit-worthy counter-parties and obtaining suffi cient collateral or other security where appropriate, as a means of mitigating the risk of fi nancial loss from defaults. The economic entity measures credit risk on a fair value basis.

The economic entity does not have any signifi cant credit risk exposure to any single counter-party or any group counter-parties having similar characteristics.

The carrying amount of fi nancial assets recorded in the fi nancial statements represents the economic entity’s maximum exposure to credit risk without taking account of the value of collateral or other security obtained.

c) Net Fair Value

The carrying amount of fi nancial assets and fi nancial liabilities recorded in the fi nancial statements represents their respective net fair values, determined in accordance with the accounting policies disclosed in note 1 to the fi nancial statements.



page 63

d) Currency Risk

The economic entity holds the majority of its funds in an Australian bank and periodically forwards British Pounds and Australian Dollars to its offi ce in Egypt. The majority of transactions performed in Egypt are conducted in British Pounds or US dollars however a small reserve of Egyptian Pounds is maintained to meet day to day administration expenses.

The economic entity has not entered into any forward foreign exchange contracts to hedge the exchange rate risk arising from any anticipated future transactions. As at 30 June 2006, Egyptian £2,869 (2005: £1,036), US$1,923,642 (2005: US$2,403) and GBP £20,308,719 (2005: £1,585,294), Euro €14 (2005: €14) bank balances were unhedged.

33. Impact of adopting the Australian equivalents to

International Financial Reporting Standards (“A-IFRS”)

Effect of A-IFRS on the Balance Sheet as at 01 July 2004

Consolidated Company

NOTE

Superseded policies *

$

Effect of transition to

A-IFRS$

A-IFRS$


$


A-IFRS$

A-IFRS$

Current assets

Cash 21,133,460 - 21,133,460 21,101,548 - 21,101,548

Trade and other receivables 30,258 - 30,258 28,905 - 28,905

Prepayments 151,400 - 151,400 22,429 - 22,429

Total current assets 21,315,118 - 21,315,118 21,152,882 - 21,152,882

Non-current assets

Receivables - - - 24,631,961 24,631,961

Plant & equipment 1,012,896 - 1,012,896 63,363 - 63,363

Investments - - - 5,511,169 5,511,169

Exploration expenditure 26,662,812 - 26,662,812 330,821 - 330,821

Total non-current assets 27,675,708 - 27,675,708 30,537,314 - 30,537,314

Total assets 48,990,826 - 48,990,826 51,690,196 - 51,690,196

Current liabilities

Accounts payables 204,314 - 204,314 95,916 - 95,916

Provisions 168,869 - 168,869 84,945 - 84,945

Total current liabilities 373,183 - 373,183 180,861 - 180,861

Non-current liabilities

Accounts payable 217,297 - 217,297 - - -

Total non-current liabilities 217,297 - 217,297 - - -

Total liabilities 590,480 - 590,480 180,861 - 180,861

Net assets 48,400,346 - 48,400,346 51,509,335 - 51,509,335

Equity

Contributed equity 68,568,240 - 68,568,240 68,568,240 - 68,568,240

General Reserve 2,809,287 - 2,809,287 3,409,287 - 3,409,287

Share Option Reserve (a) - - - - - -

Accumulated losses (22,977,181) - (22,977,181) (20,468,192) - (20,468,192)

Total equity 48,400,346 - 48,400,346 51,509,335 - 51,509,335

* Reported fi nancial position for the fi nancial year ended




Consolidated Company

NOTE


$


A-IFRS$

A-IFRS$


$


A-IFRS$

A-IFRS$

Effect of A-IFRS on the Income Statement for the fi nancial year ended 30 June 2005

Revenue 1,046,309 - 1,046,309 1,046,137 - 1,046,137

Other income 102,351 - 102,351 538,934 - 538,934

Administration expenses (1,132,327) (63,504) (1,195,831) (1,200,686) (63,504) (1,264,190)

Foreign exchange gain/(loss) (543,942) - (543,942) (562,767) - (562,767)Marketing expenses (145,044) - (145,044) (144,044) - (144,044)

Travelling expenses (108,371) - (108,371) (108,371) - (108,371)

Other expenses (25,884) - (25,884) - - -

Profi t/(Loss) before income tax (a) (806,908) (63,504) (870,412) (430,797) (63,504) (494,301)

Tax (expense)/income - - - - - -

Net profi t/(loss) for the period (806,908) (63,504) (870,412) (430,797) (63,504) (494,301)

* Reported fi nancial results under previous Australian GAAP.

Effect of A-IFRS on the Consolidated Balance Sheet as at 30 June 2005.

Current assets

Cash 17,984,972 - 17,984,972 17,907,208 - 17,907,208

Trade and other receivables 298,118 - 298,118 8,956 - 8,956

Prepayments 114,527 - 114,527 22,429 - 22,429

Total current assets 18,397,617 - 18,397,617 17,938,370 - 17,938,370Non-current assets

Trade and other receivables - - - 27,511,390 - 27,511,390

Plant & equipment 1,178,079 - 1,178,079 57,235 - 57,235

Investments - - - 5,511,169 5,511,169

Exploration expenditure 28,715,883 - 28,715,883 330,821 - 330,821

Total non-current assets 29,893,962 - 29,893,962 33,410,615 - 33,410,615Total assets 48,291,579 - 48,291,579 51,348,985 - 51,348,985

Current liabilities

Accounts payable 232,549 - 232,549 69,748 - 69,748

Provisions 234,092 - 234,092 166,049 - 166,049

Total current liabilities 466,641 - 466,641 235,797 - 235,797Non-current liabilities

Accounts payable 196,850 - 196,850 - - -

Total non-current liabilities 196,850 - 196,850 - - -Total liabilities 663,491 - 663,491 235,797 - 235,797

Net assets 47,628,088 - 47,628,088 51,113,188 - 51,113,188

Equity

Contributed equity 68,602,890 - 68,602,890 68,602,890 - 68,602,890

General Reserve 2,809,287 - 2,809,287 3,409,287 - 3,409,287

Share Option Reserve (a) - 63,504 63,504 - 63,504 63,504

Accumulated losses (f) (23,784,089) (63,504) (23,847,593) (20,898,989) (63,504) (20,962,493)Total equity 47,628,088 - 47,628,088 51,113,188 - 51,113,188

* Reported fi nancial position under previous Australian GAAP.



page 65

(a) Share-based payments

Under AASB 2 Share Based Payments, the Company has determined the fair value of options issued to employees as remuneration and recognised an expense in the Consolidated Income Statement over the vesting period.

At the date of transition no adjustment was made as there were no options issued from the commencement date of 7 November 2002 that had not vested at 1 January 2005. For the year ended 30 June 2006 and the fi nancial year ended 30 June 2005 share-based payments of $63,504 (included in employee benefi t expenses) which were not recognised under the superseded policies were recognised under A-IRFS, with a corresponding increase in equity.

(b) Property, plant and equipment

On transition to A-IFRS, the entity had several options in the determination of the cost of each tangible asset and could also elect to use the cost or fair value basis for the measurement of each class of property, plant and equipment after transition. The Consolidated Entity has elected to continue to measure property, plant and equipment on the historical cost option. The treatment of depreciation and the estimated useful life have also remained the same. There has not been any adjustment under A-IFRS in the consolidated entity either at transition or comparative period balance date.

(c) Restoration provisions

Under AASB 137 Provisions, Contingent Liabilities and Contingent Assets, the Company is required to recognise the full provision for rehabilitation, based on discounted future cash fl ows, at the date of transition to A-IFRS. A corresponding asset net of depreciation to the date of transition may qualify for recognition as part of development costs and be amortised together with development assets.

The Company, via its wholly owned subsidiary, Pharaoh Gold Mines NL (Pharaoh), is a party to a Concession Agreement with the Government of the Arab Republic of Egypt, whereby Pharaoh is exploring for gold and associated minerals in the Eastern Desert of Egypt. Pharaoh has progressed the Sukari Project to the stage where a feasibility study is presently being carried out to a bankable standard into the development of a 4 to 5 million tonne per annum processing facility. If the Sukari Project goes into production, then under the terms of Concession Agreement, Pharaoh or the Operating Company, (which will be owned equally by Pharaoh and the Government), as the case may be, shall be responsible for the reasonable restoration and rehabilitation of the project area, in a manner consistent with good international practice in the mining industry. As the Company is not yet in production, there is no obligation for a rehabilitation provision at this stage. There are therefore no adjustments for rehabilitation provisions at this stage.

(d) Impairment of assets

Under A-IFRS, both current and non-current assets are tested for impairment, including property plant and equipment.

The entity has determined that no asset impairment provisions are required on transition to A-IFRS at 01 July 2004, 30 June 2005 or 30 June 2006.

(e) Income tax

Under superseded policies, the consolidated entity adopted tax-effect accounting principles whereby income tax expenses were calculated on pre-tax accounting profi ts after adjustment for permanent differences. The tax-effect of timing differences, which occur when items are included or allowed for income tax purposes in a period different to that for accounting, were recognised at current taxation rates as deferred tax assets and deferred tax liabilities, as applicable.

Under A-IFRS, deferred tax is determined using the balance sheet liability method in respect of temporary differences arising from differences between the carrying account to assets and liabilities in the fi nancial statements and their corresponding tax bases.

There is no impact on the cumulative fi nancial position at 30 June 2006 or at transition to A-IFRS. This is because:-

Tax Losses

A deferred tax asset will not be recognised for carry forward tax losses because it is not probable that future taxable profi ts will be available against which the unused tax losses can be utilised.




(f) Accumulated losses

The effect of the above adjustments on retained earnings is as follows:

Consolidated

1 Jul 04$

30 Jun 05$

Expensing share-based payments - 63,504

Total adjustment to accumulated losses - 63,504

(g) Cash fl ows

The transition to A-IFRS has had no effect on the consolidated entity’s cash fl ows.



page 67

Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere in this report is as follows. The information is as at 01 September 2006.

SUBSTANTIAL SHAREHOLDERS (holding more than 5%)

Fully Paid Ordinary Shares

Shareholder Ordinary Shares Percentage

Willbro Nominees Limited 60,829,816 10.51%

El-Raghy Kriewaldt Pty Ltd 55,299,372 9.56%

BBHISL Nominees Limited 46,495,849 8.03%

Chase Nominees Limited 36,545,128 6.32%

Euroclear Nominees Limited 32,165,000 5.56%

TOP 20 SHAREHOLDERS

(a) Fully Paid Ordinary Shares

Quoted Shares

Number % Held

Willbro Nominees Limited 60,829,816 10.51%

El-Raghy Kriewaldt Pty Ltd 55,299,372 9.56%

BBHISL Nominees Limited 46,495,849 8.03%

Chase Nominees Limited 36,545,128 6.32%

Euroclear Nominees Limited 32,165,000 5.56%

Vidacos Nominees Limited 24,377,100 4.21%

Goldman Sachs Securities (Nominees) Limited 21,300,500 3.68%

State Street Nominees Limited 19,358,772 3.35%

Nordana Pty Ltd 17,595,714 3.04%

Nortrust Nominees Limited 16,093,898 2.78%

Morstan Nominees Limited 15,679,400 2.71%

Goldman Sachs International 15,383,084 2.66%

HSBC Global Custody Nominee (UK) Limited 13,209,684 2.28%

Barclayshare Nominees Limited 11,854,991 2.05%

Pershing Keen Nominees Limited 10,267,842 1.77%

TD Waterhouse Nominees (Europe) Limited 10,151,976 1.75%

Mellon Nominees (UK) Limited 7,903,500 1.37%

L R Nominees Limited 6,912,131 1.19%

DRKWS Nominees Limited 6,467,000 1.12%

National Nominees Limited 6,188,870 1.07%

434,079,627 75.01%

At 01 September 2006, there were 578,668,369 fully paid ordinary shares held by 1,921 individual shareholders. All issued ordinary shares carry one vote per share.

Additional ASX Information



Additional ASX Information


(b) Options

Unquoted Options

Number % Held

Issued under Employee Share Option Plan 2002 7,717,000 100.00%

Other - -

Total 7,717,000 100.00%

DISTRIBUTION OF HOLDERS OF EQUITY SECURITIES

Holding Range Ordinary Shares Unquoted Options

1 - 1,000 138 -

1,001 - 5,000 660 -

5,001 - 10,000 376 -

10,001 - 100,000 588 16

100,001 and over 159 11

Total 1921 27

As at 01 September 2006, there were 60 shareholders with less than marketable parcel.

CLASS OF SHARES AND VOTING RIGHTS

The voting rights attaching to the ordinary shares, set out in Clause 12.8 of the Company’s Constitution are: “Subject to any rights or restrictions for the time being attached to any class or classes of shares -

(a) at meetings of members or classes of members each member entitled to vote may vote in person or by proxy or attorney; and;

(b) on a show of hands every person present who is a member has one vote for each ordinary share held and on a poll every person present or by proxy or attorney has one vote for each ordinary share held.”

VENDOR SHARES

There are no vendor securities on issue at the date of this report.

“Gold, substance of the Gods”

AUSTRALIA57 Kishorn Road, Mount Pleasant

Perth, Western Australia 6153 Telephone: +61 8 9316 2640 Facsimile: +61 8 9316 2650

EGYPT361 EI-Horia Road, Sedi Gaber

Alexandria, Egypt Telephone: 203 5411 259 Facsimile: 203 5226 350

ABN 86 007 700 352

Documents

Annual Report 2006 - Centamin€¦ · page 4 Centamin Egypt Limited Annual Report 2006 DRILLING RESULTS Amun Zone Drilling was initially focused in the Amun Zone, from 9900N – 10700N,