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Buffalo Coal Corp - Financial Results For The Period Ended 31 December 2014

Release Date: 27/03/2015 17:15:00      Code(s): BUC     
BUFFALO COAL CORP.
(Registration number: 001891261)
(External company registration number: 2011/011661/10)
Share code on the Toronto Stock Exchange: BUF
Share code on the JSE Limited: BUC
ISIN: CA1194421014
"Buffalo Coal" or "the Company"

CONSOLIDATED FINANCIAL STATEMENTS

For the ten months ended December 31, 2014 and
twelve months ended February 28, 2014
(Presented in South African Rands)

Consolidated Statements of Financial Position
(Presented in South African Rands)
                                                             December 31,    February 28,        March 1,   December 31,   
                                                                     2014            2014            2013           2014   
                                                                                 (Note 5)        (Note 5)       (Note 2)   
                                                    Notes               R               R               R             C$   
Assets                                                                                                                     
Non-current assets                                                                                                         
Property, plant and equipment                          10     561 403 916     575 220 923     616 027 553     56 232 050   
Intangible assets                                      11               -      11 506 000      32 803 013              -   
Goodwill                                               11               -               -     134 508 493              -   
Investment in financial assets                         12      29 134 182      23 586 748      23 343 914      2 918 175   
Deferred tax asset                                     13      15 495 588               -               -      1 552 089   
Other receivables                                      14      14 238 959       3 907 685       3 346 954      1 426 220   
Long-term restricted cash                              17      11 200 000      11 200 000      12 542 241      1 121 829   
Total non-current assets                                      631 472 645     625 421 356     822 572 168     63 250 363   
Current assets                                                                                                             
Trade and other receivables                            14      95 474 959      77 597 078      54 075 952      9 563 084   
Inventories                                            15      27 034 967      73 376 235      89 618 092      2 707 911   
Current portion of investment in financial assets      12               -               -      16 592 600              -   
Interest bearing receivables                           16               -      29 140 388      46 947 676              -   
Non-interest bearing receivables                       16       1 587 765       1 504 434       1 034 384        159 036   
Taxation receivable                                             2 336 605       9 115 182      18 801 738        234 041   
Restricted cash                                        17               -       6 190 531         441 305              -   
Cash and cash equivalents                              18      12 120 081      14 582 999      26 704 813      1 213 987   
Total current assets                                          138 554 377     211 506 846     254 216 560     13 878 059   
Total assets                                                  770 027 022     836 928 202   1 076 788 728     77 128 421   
Equity and liabilities                                                                                                     
Capital and reserves                                                                                                       
Share capital                                          19     937 966 442     948 816 452     859 151 468     93 949 782   
Currency translation reserve                                (219 945 085)   (268 857 222)   (189 150 061)   (22 030 418)   
Reserves                                               20      19 599 807      29 872 065      63 284 986      1 963 181   
Accumulated retained loss                                   (497 359 808)   (385 446 596)   (146 066 853)   (49 817 183)   
Equity attributable to owners of the company                  240 261 356     324 384 699     587 219 540     24 065 362   
Non-controlling interest                                        4 339 142       4 339 142       4 339 142        434 623   
Total equity                                                  244 600 498     328 723 841     591 558 682     24 499 985   
Non-current liabilities                                                                                                    
Borrowings                                             21     132 047 902      91 228 073     128 582 544     13 226 349   
Warrant liability                                      21       8 818 534               -               -        883 293   
RCF loan facilities                                    22     132 542 252      50 887 479               -     13 275 865   
Conversion option liability                            22      54 088 555       7 828 422               -      5 417 686   
Asset retirement obligation                            23      18 758 187      31 929 112      29 906 948      1 878 881   
Deferred tax liability                                 13               -      47 204 251      83 179 991              -   
Total non-current liabilities                                 346 255 430     229 077 337     241 669 483     34 682 074   
Current liabilities                                                                                                        
Trade and other payables                               24     170 506 885     170 161 406     146 647 964     17 078 528   
Current portion of borrowings                          21       6 000 000      65 578 297      94 217 841        600 980   
Current portion of RCF loan facilities                 22               -      40 723 113               -              -   
Current portion of asset retirement obligation         23       2 664 209       2 664 209       2 694 758        266 855   
Current liabilities                                           179 171 094     279 127 025     243 560 563     17 946 362   
Total liabilities                                             525 426 524     508 204 362     485 230 046     52 628 436   
Total equity and liabilities                                  770 027 022     836 928 203   1 076 788 728     77 128 422   


Commitments and contingencies                       1, 30

Approved on behalf of the Board:

Signed "Craig Wiggill", Director                                                        Signed "Robert Francis", Director

The accompanying notes are an integral part of the consolidated financial statements.


Consolidated Statements of Profit or Loss and Other Comprehensive Income
(Presented in South African Rands)
                                                                    10 months       12 months      10 months   
                                                                        ended           ended          ended   
                                                                 December 31,    February 28,   December 31,   
                                                        Notes            2014            2014           2014   
                                                                                     (Note 5)       (Note 2)   
                                                                            R               R             C$   
Revenue                                                           593 841 226     688 414 504     59 481 077   
Cost of sales                                               6   (637 994 419)   (710 985 206)   (63 903 605)   
Gross loss                                                       (44 153 193)    (22 570 702)    (4 422 528)   
Other (expense)/income - net                                7    (22 558 050)   (171 911 798)    (2 259 488)   
General and administration expenses                         6    (59 982 910)    (81 869 748)    (6 008 084)   
Loss before the undernoted                                      (126 694 153)   (276 352 248)   (12 690 100)   
Finance income                                              8       1 073 085       3 236 090        107 484   
Finance expense                                             8    (37 425 325)    (24 345 023)    (3 748 643)   
Loss before income tax                                          (163 046 393)   (297 461 181)   (16 331 259)   
Income tax benefit                                          9      54 605 580      19 396 655      5 469 473   
Loss for the year                                               (108 440 812)   (278 064 525)   (10 861 785)   
Other comprehensive loss                                                    -    (79 707 161)              -   
Total comprehensive loss for the year                           (108 440 812)   (357 771 686)   (10 861 785)   
Loss attributable to:                                                                                          
- Owners of the parent                                          (108 440 812)   (357 771 686)   (10 861 785)   
- Non-controlling interest                                                  -               -              -   
                                                                (108 440 812)   (357 771 686)   (10 861 785)   
Net loss per share - basic and diluted                                 (2.11)          (7.97)         (0.21)   
Headline loss per share - basic and diluted                            (2.10)          (7.79)         (0.21)   
Weighted average number of common shares outstanding:                                                          
- Basic                                                            51 408 750      34 873 429     51 408 750   
- Diluted                                                          51 408 750      34 873 429     51 408 750   


The accompanying notes are an integral part of the consolidated financial statements.

Consolidated Statements of Changes in Equity
(Presented in South African Rands)
                                                                                 Attributable to owners of the Group
                                                                                       Reserves                                     Currency    
                                           No. of shares          Share                         BEE option       Accumulated     translation                   Non-controlling                  
                                 Notes            issued        capital    Option reserve          reserve     retained loss         reserve          Total           interest    Total equity
                                                                      R                 R                R                 R               R              R                  R               R
Balance at March 1, 2013             5        34 386 035    859 151 468        54 211 275        9 073 711     (146 066 853)   (189 150 061)    587 219 540          4 339 142     591 558 682
Shares issued in relation to RCF
Convertible Loan                    19         3 041 047      5 607 185                 -                -                 -               -      5 607 185                  -       5 607 185
Stock-based compensation                               -              -         3 316 760                -                 -               -      3 316 760                  -       3 316 760
Stock options expired/cancelled     20                 -              -      (38 682 761)                -        38 682 761               -              -                  -               -
Other comprehensive gain/(loss)
for the period                                         -     84 057 799         1 953 080                -             2 022    (79 707 161)      6 305 740                  -       6 305 740
Net loss for the period                                -              -                 -                -     (278 064 526)               -  (278 064 526)                  -   (278 064 526)
Balance at February 28, 2014         5        37 427 082    948 816 452        20 798 354        9 073 711     (385 446 596)   (268 857 222)    324 384 699          4 339 142     328 723 841

Other comprehensive gain/(loss)
due to change in functional
currency                                               -              -                 -                -      (48 912 137)      48 912 137              -                  -               -
Balance at 1, March 2014                      37 427 082    948 816 452        20 798 354        9 073 711     (434 358 733)   (219 945 085)    324 384 699          4 339 142     328 723 841
Shares issued in relation to RCF
Convertible Loan                    19        20 119 629     24 014 735                 -                -                 -               -     24 014 735                  -      24 014 735
Stock-based compensation                               -              -           302 734                -                 -               -        302 734                  -         302 734
Stock options expired/cancelled     20                 -              -      (10 574 992)                -        10 574 992               -              -                  -               -
Cancellation of shares in escrow    25       (1 350 000)   (34 864 745)                 -                -        34 864 745                              -                  -               -
Net loss for the period                                -              -                 -                -     (108 440 812)               -  (108 440 812)                  -   (108 440 812)
Balance at December 31, 2014                  56 196 711    937 966 442        10 526 096        9 073 711     (497 359 808)   (219 945 085)    240 261 356          4 339 142     244 600 498

The accompanying notes are an integral part of the consolidated financial statements.

Consolidated Statements of Cash Flow
(Presented in South African Rands)
                                                                          10 months      12 months      10 months   
                                                           Notes       December 31,   February 28,   December 31,   
                                                                               2014           2014           2014   
                                                                                          (Note 5)       (Note 2)   
                                                                                  R              R             C$   
Cash flows from operating activities                                                                                
Cash (utilized in)/generated from operations                  27       (15 617 886)      5 354 138    (1 564 338)   
Interest received                                                         1 073 085      1 084 015        107 484   
Interest paid                                                           (8 787 101)   (18 413 418)      (880 145)   
Taxation (paid)/recovered                                               (1 315 599)      8 903 441      (131 775)   
Net cash utilized in operating activities                              (24 647 501)    (3 071 824)    (2 468 774)   
Cash flows from investing activities                                                                                
Investment in financial assets                                          (3 846 794)    (7 843 936)      (385 305)   
Proceeds from maturity of financial assets                                        -     27 120 504              -   
Purchase of property, plant and equipment                             (138 210 966)   (60 678 117)   (13 843 662)   
Proceeds from the disposal of property, plant and equipment               3 360 526      7 191 872        336 601   
Movement in non-current other receivables                              (10 331 276)              -    (1 034 814)   
Settlement of cancelled Riversdale Acquisition                           29 140 388              -      2 918 796   
Movement in non-interest bearing receivables                               (83 331)      (481 784)        (8 347)   
Movement in restricted cash                                               6 190 532    (4 513 593)        620 064   
Net cash utilized in investing activities                             (113 780 921)   (39 205 054)   (11 396 668)   
Cash flows from financing activities                                                                                
Proceeds from RCF Convertible Loan                                      139 637 969    105 827 928     13 986 595   
Issuance costs related to the RCF Convertible Loan                      (3 280 665)    (6 432 065)      (328 602)   
Drawdowns from the revolving credit facility                             11 037 071              -      1 105 509   
Repayment of borrowings                                                 (8 695 265)   (63 467 241)      (870 946)   
Issuance costs related to restructuring of borrowings                   (2 733 605)              -      (273 807)   
Movement in loans payable                                                         -      (214 798)              -   
Net cash generated from financing activities                            135 965 504     35 713 823     13 618 748   
Net decrease in cash and cash equivalents                               (2 462 918)    (6 563 055)      (246 694)   
Cash at the beginning of the period                                      14 582 999     26 704 813      1 460 681   
Exchange loss on cash and cash equivalents                                        -    (5 558 759)              -   
Cash at the end of the period                                            12 120 081     14 582 999      1 213 987   
Non-cash investing and financing transactions                                                                       
Equipment purchased under short-term finance lease                                                                  
arrangement                                                            (18 643 930)              -    (1 867 437)   
Warrants issued relating to restructured borrowings                      22 987 796              -      2 302 533   
Common shares issued in settlement of the                                                                           
establishment fees relating to the RCF loan facility                     15 946 835      3 959 894      1 597 287   
Common shares issued in settlement of the interest                                                                  
owing on the RCF loan facilities                                          8 067 900      1 647 291        808 107   
Cancellation of shares in escrow                                       (34 864 745)              -    (3 492 167)   
Total                                                                   (6 506 144)      5 607 185      (651 677)   

The accompanying notes are an integral part of the consolidated financial statements.

Notes to the Consolidated Financial Statements
For the years ended December 31, 2014 and February 28, 2014
(Presented in South African Rands)

1    BASIS OF PREPARATION

Buffalo Coal Corp. (previously known as "Forbes & Manhattan Coal Corp") (individually, or collectively with its
subsidiaries, as applicable, the "Company", "BC Corp" or the "Group") is a coal mining company incorporated in Ontario,
Canada. The Company is listed on the Toronto Stock Exchange ("TSX") and the Johannesburg Stock Exchange ("JSE"). The
registered office of the Company is Brookfield Place, Bay/Wellington Tower, 181 Bay Street, Suite 2100, Toronto, Ontario
M5J 2T3. The head office of the Company is located at Portion 3rd Floor, Building 13, Woodlands Office Park, Cnr
Woodlands & Kelvin Drive, Woodmead, Johannesburg, South Africa, 2052. These consolidated financial statements were
approved and authorized for issue by the Board of Directors on March 26, 2015.

The Company owns a 100% interest in Buffalo Coal Dundee Proprietary Limited (previously known as "Forbes Coal
Proprietary Limited") ("BC Dundee"), a South African company that holds an interest in coal mines in South Africa. BC
Dundee holds a 70% interest in Zinoju Coal Proprietary Limited ("Zinoju") (collectively "BC Dundee Group") which holds
the mineral rights relating to the mining properties. The properties comprise of the operating Magdalena bituminous
mine ("Magdalena") and the Aviemore anthracite mine ("Aviemore") which are engaged in open-pit and underground
coal mining. The remaining 30% interest in Zinoju is held by South African Black Economic Empowerment ("BEE")
partners. BEE is a statutory initiative on behalf of the South African government, enacted to increase access by
historically disadvantaged South Africans ("HDSA") to the South African economy by increasing HDSA ownership in South
African enterprises.

The business of mining and exploring for minerals involves a high degree of risk and there can be no assurance that
current operations will result in profitable mining operations. The recoverability of the carrying value of property, plant
and equipment and intangibles assets and the Company's continued existence is dependent upon the preservation of its
interests in the underlying properties, the discovery of economically recoverable reserves, the achievement of profitable
operations, ability to transport and sell its coal, or the ability of the Company to raise additional financing, if necessary,
or alternatively upon the Company's ability to dispose of its interests on an advantageous basis. Changes in future
conditions could require material write-downs to the carrying values. The Company's assets may also be subject to
increases in taxes and royalties, renegotiation of contracts, currency exchange fluctuations and restrictions, and political
uncertainty.

Although the Company has taken steps to verify title to the properties on which it is conducting its exploration,
development and mining activities, these procedures do not guarantee the Company's title. Property title may be
subject to government licensing requirements or regulations, unregistered prior agreements, unregistered claims, land
claims and non-compliance with regulatory and environmental requirements.

2       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1     Basis of preparation

These annual consolidated financial statements of the Group were prepared in accordance with International Financial
Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB"), and have been
prepared in accordance with accounting policies based on the IFRS standards and International Financial Reporting
Interpretations Committee ("IFRIC") interpretations. The policies set out below were consistently applied to all the years
presented unless otherwise noted below.

The annual consolidated financial statements have been prepared under the historical cost convention, as modified by
financial assets at fair value through profit or loss and compound financial instruments.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgment in the process of applying the accounting policies of the Group.
The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are
significant to the consolidated financial statements are disclosed in note 4.

The consolidated financial statements have been prepared on the basis of accounting principles applicable to a going
concern, which assume that the Group will continue in operation for the foreseeable future and will be able to realize its
assets and discharge its liabilities in the normal course of operations. The Company closed the third tranche of funding of
US$15,0 million with Resource Capital Fund V L.P ("RCF") on July 3, 2014, which has been used to finance new capital
items and for working capital purposes. The Company continues to incur operating losses and is dependent upon
reaching profitable levels of operation in the future to support working capital needs. The Company suffered from two
significant incidents during September 2014 which halted production at Magdalena and Aviemore for a period of time.
Furthermore, the performance at Magdalena has deteriorated significantly over the past financial year which has
resulted in the Company implementing a restructuring at the mine. Subsequent to December 31, 2014, the Company has
signed a term sheet for an additional US$4,0 million bridge loan from RCF which will be used for the restructuring and
for working capital purposes (note 32). The Company believes that, barring any further unforeseen incidents and subject
to meeting the current forecasts, the current steps the Company is and has taken (including obtaining additional funding
from RCF, the restructuring of loss making contracts and restructuring of the mine operations) will enable it to operate
profitably in the foreseeable future and generate positive cash flows. The current material uncertainties cast significant
doubt as to whether the various steps being taken will be completed as expected and whether or when the Company
can attain profitability and positive cash flow from operations.

If the going concern assumption was not appropriate for these annual consolidated financial statements then
adjustments would be necessary to the carrying values of assets and liabilities, the reported revenues and expenses, and
the statement of financial position classifications. Such adjustments could be material.

Effective March 1, 2014, the Group and its subsidiaries changed their financial year-ends from February 28 to December
31. References to CY2014 mean the financial year ended December 31, 2014, and to PY2014 mean the financial year
ended February 28, 2014.

References to "R", "Rands" mean South African Rands, "C$" mean Canadian Dollars and to "US$" mean United States
Dollars.

Convenience rate translation

The Company's functional and presentation currency is Rands. The Canadian Dollar amounts provided in the financial
statements represent supplementary information solely for the convenience of the reader. The financial position as of
December 31, 2014 and the financial results for the ten months ended December 31, 2014 were translated into
Canadian Dollars using a convenience translation at the rate of C$1:R9.9837, which is the exchange rate published on
Oanda.com as of December 31, 2014. Such presentation is not in accordance with IFRS and should not be construed as a
representation that the Rand amounts shown could be readily converted, realized or settled in Canadian Dollars at this
or at any other rate.

2.2     New standards, amendments and interpretations

The following standards, amendments and interpretations are issued and effective for the first time for the
December 31, 2014 financial year-end:

Amendments to IAS 32 ? 'Financial Instruments: Presentation'
The IASB has issued amendments to the application guidance in IAS 32 that clarify some of the requirements for
offsetting financial assets and financial liabilities on the statement of financial position. However, the clarified offsetting
requirements for amounts presented in the statement of financial position continue to be different from United States
Generally Accepted Accounting Practice ("US GAAP"). This amendment has not had a significant impact on the Group.

IASB issues narrow-scope amendments to IAS 36 ? 'Impairment of assets'
These amendments address the disclosure of information about the recoverable amount of impaired assets if that
amount is based on fair value less costs of disposal. The amendment has been incorporated and disclosed appropriately
in note 11.

Amendments to IAS 39 ? 'Financial instruments: Recognition and Measurement'
The IASB issued amendments to IAS 39 in June 2013 to clarify that novation of a hedging derivative to a clearing
counterparty as a consequence of laws or regulations or the introduction of laws or regulations does not terminate
hedge accounting. This amendment has not had a significant impact on the Group.

Amendments to IFRS 10, 'Consolidated financial statements', IFRS 12, 'Disclosures of interest in other entities' and IAS
27, 'Separate financial statements' for investment entities
The amendments mean that many funds and similar entities will be exempt from consolidating most of their
subsidiaries. Instead they will measure them at fair value through profit or loss. The amendments give an exception to
entities that meet an 'investment entity' definition and which display particular characteristics. Changes have also been
made in IFRS 12 to introduce disclosures that an investment entity needs to make . This amendment has had no impact
on the Group.

The following standards, amendments and interpretations are issued but not yet effective for the December 31, 2014
financial year-end:

IFRS 9 -'Financial Instruments' ? effective January 1, 2018
IFRS 9, issued in November 2009, introduced new requirements for the classification and measurement of financial
assets. IFRS 9 was subsequently amended in October 2010 to include requirements for the classification and
measurement of financial liabilities and for derecognition, and in November 2013 to include the new requirements for
general hedge accounting. Another revised version of IFRS 9 was issued in July 2014 mainly to include a) impairment
requirements for financial assets and b) limited amendments to the classification and measurement requirements by
introducing a 'fair value through other comprehensive income' ("FVTOCI") measurement category for certain simple
debt instruments.

All recognized financial assets that are within the scope of IAS 39, Financial Instruments: Recognition and Measurement
are required to be subsequently measured at amortized cost or fair value. In addition, entities may make an irrevocable
election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other
comprehensive income, with only dividend income generally recognized in profit or loss.


With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires
that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that
liability is presented in other comprehensive income ("OCI"), unless the recognition of the effects of changes in the
liability's credit risk in OCI would create or enlarge an accounting mismatch in profit or loss. Changes in fair value
attributable to a financial liability's credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire
amount of the change in fair value of the financial liability designated as fair value through profit or loss is presented in
profit or loss.

In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model, as opposed to an
incurred credit loss model under IAS 39. The expected credit loss model requires an entity to account for expected credit
losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial
recognition.

The new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently
available in IAS 39. Under IFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge
accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk
components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been
overhauled and replaced with the principle of an 'economic relationship'. Retrospective assessment of hedge
effectiveness is also no longer required. Enhanced disclosure requirements about an entity's risk management activities
have also been introduced.

The Group anticipates that the application of IFRS 9 in future may have a material impact on amounts reported in
respect of the Group's financial assets and financial liabilities. However, it is not practicable to provide a reasonable
estimate of the effect of IFRS 9 until the Group undertakes a detailed review.

IFRS 10 ? 'Consolidated Financial Statements' and IAS 28 ? 'Investments in Associates and Joint Ventures' ? effective
January 1, 2016
IFRS 10 and IAS 28 were amended in September 2014 to address a conflict between the requirements of IAS 28 and IFRS
10 and clarify that in a transaction involving an associate or joint venture, the extent of gain or loss on recognition
depends on whether the assets sold or contributed constitute a business. The Group does not anticipate that the
application of these amendments will have a material impact on the Group's consolidated financial statements.

IFRS 11 ? 'Joint Arrangements' ? effective January 1, 2016
IFRS 11 was amended in May 2014 to require business combination accounting to be applied to acquisitions of interests
in a joint operation that constitute a business. The Group does not anticipate that the application of these amendments
will have a material impact on the Group's consolidated financial statements.

IFRS 15 ? 'Revenue from Contracts with Customers' ? effective January 1, 2017
IFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising
from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18,
Revenue; IAS 11, Construction Contracts and the related Interpretations when it becomes effective.


The core principle of IFRS 15 is that an entity should recognize revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for those goods or services. Under IFRS 15, an entity recognizes revenue when (or as) a performance obligation is
satisfied, i.e. when 'control' of the goods or services underlying the particular performance obligation is transferred to
the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore,
extensive disclosures are required by IFRS 15.

The Group anticipates that the application of IFRS 15 in the future may have a material impact on the amounts reported
and disclosures made in the Group's consolidated financial statements. However, it is not practicable to provide a
reasonable estimate of the effect of IFRS 15 until the Group performs a detailed review.

IAS 1 ? 'Presentation of Financial Statements' ? effective January 1, 2016
IAS 1 was amended in December 2014 in order to clarify, among other things, that useful information should not be
obscured by aggregating or disaggregating that information and that materiality consideration apply to all parts of the
financial statements and that even when a standard requires a specific disclosure, materiality considerations do apply.
The Group does not anticipate that the application of these amendments will have a material impact on the Group's
consolidated financial statements.

IAS 27 ? 'Separate Financial Statements' ? effective January 1, 2016
IAS 27 was amended in August 2014 to reinstate the equity method as an accounting option for investments in
subsidiaries, joint ventures and associates in an entity's separate financial statements. The Group does not anticipate
that the application of these amendments will have a material impact on the Group's consolidated financial statements.

Amendments to IAS 16 ? 'Property, Plant and Equipment', and IAS 38 ? 'Intangible Assets' - Clarification of Acceptable
Methods of Depreciation and Amortization ? effective January 1, 2016
The amendments to IAS 16 prohibit entities from using a revenue-based depreciation method for items of property,
plant and equipment. The amendments to IAS 38 introduce a rebuttable presumption that revenue is not an appropriate
basis for amortization of an intangible asset. The presumption can only be rebutted in the following two limited
circumstances: when the intangible asset is expressed as a measure of revenue; or when it can be demonstrated that
revenue and consumption of the economic benefits of the intangible asset are highly correlated.

Currently, the Group uses the straight-line or units of production method for depreciation and amortization of its
property, plant and equipment, and intangible assets respectively. The Group does not anticipate that the application of
these amendments will have a material impact on the Group's consolidated financial statements.

Amendments to IAS 19 ? 'Defined Benefit Plans: Employee Contributions' ? effective July 1, 2014
These narrow scope amendments apply to contributions from employees or third parties to defined benefit plans. The
objective of the amendments is to simplify the accounting for contributions that are independent of the number of years
of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary.
The Group does not anticipate that the application of these amendments will have a material impact on the Group's
consolidated financial statements.

Annual Improvements to IFRSs 2010-2012 Cycle ? effective July 1, 2014:

IFRS 2, 'Share-based Payments' - The amendments clarify the definition of a 'vesting condition' and separately define
'performance condition' and 'service condition'.

IFRS 3, 'Business Combinations' ? The amendments clarify that a contingent consideration that is classified as an asset or
a liability should be measured at fair value at each reporting date, irrespective of whether the contingent consideration
is a financial instrument within the scope of IFRS 9 or IAS 39 or a non-financial asset or liability. Changes in fair value
(other than measurement period adjustments) should be recognized in profit or loss.

IFRS 8, 'Operating Segments' - The amendments require an entity to disclose the judgments made by management in
applying the aggregation criteria to operating segments, including a description of the operating segments aggregated
and the economic indicators assessed in determining whether the operating segments have 'similar economic
characteristics'; and clarify that a reconciliation of the total of the reportable segments' assets to the entity's assets
should only be provided if the segment assets are regularly provided to the chief operating decision-maker.

IFRS 13, 'Fair Value Measurements' - The amendments to the basis for conclusions of IFRS 13 and consequential
amendments to IAS 36 and IFRS 9 did not remove the ability to measure short-term receivables and payables with no
stated interest rate at their invoice amounts without discounting, if the effect of discounting is immaterial.

IAS 16 and IAS 38 - The amendments remove perceived inconsistencies in the accounting for accumulated depreciation/
amortization when an item of property, plant and equipment or an intangible asset is revalued. The amended standards
clarify that the gross carrying amount is adjusted in a manner consistent with the revaluation of the carrying amount of
the asset and that accumulated depreciation/amortization is the difference between the gross carrying amount and the
carrying amount after taking into account accumulated impairment losses.

IAS 24, Related Party Disclosure - The amendments clarify that a management entity providing key management
personnel services to a reporting entity is a related party of the reporting entity. Consequently, the reporting entity
should disclose as related party transactions the amounts incurred for the service paid or payable to the management
entity for the provision of key management personnel services. However, disclosure of the components of such
compensation is not required.

The Group does not anticipate that the application of these amendments will have a significant impact on the Group's
consolidated financial statements.

Annual Improvements to IFRSs 2011-2013 Cycle ? effective July 1, 2014:

IFRS 3 - The amendment clarifies that the standard does not apply to the accounting for the formation of all types of
joint arrangements in the financial statements of the joint arrangement itself.

IFRS 13 ? The amendment clarifies that the scope of the portfolio exception for measuring the fair value of a group of
financial assets and financial liabilities on a net basis includes all contracts that are within the scope of, and accounted
for in accordance with, IAS 39 or IFRS 9, even if those contracts do not meet the definitions of financial assets or financial
liabilities within IAS 32.

IAS 40, 'Investment Property' - The amendment clarifies that IAS 40 and IFRS 3 are not mutually exclusive and application
of both standards may be required. The guidance in IAS 40 assists preparers to distinguish between investment property
and owner-occupied property. Preparers also need to refer to the guidance in IFRS 3 to determine whether the
acquisition of an investment property is a business combination.

The Group does not anticipate that the application of these amendments will have a significant impact on the Group's
consolidated financial statements.

2.3     Consolidation

The annual consolidated financial statements comprise the financial statements of the Company and its subsidiaries, BC
Dundee, Zinoju, Zinoju Rehabilitation Trust ("the Trust") and Buffalo Coal Proprietary Limited ("BC") (previously
"Bowwood and Main No 33 Proprietary Limited").

(a)     Subsidiaries

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns from
its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries
are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date
that control ceases. The Company reassesses whether or not it controls an investee if facts and circumstances indicate
that there are changes to one or more of the three elements of control.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the
acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

The Group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair
value or at the non-controlling interest's proportionate share of the recognized amounts of the acquiree's identifiable
net assets. If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously
held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date.

Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is
recognized in accordance with IAS 39 either in profit or loss or as a change to OCI. Contingent consideration that is
classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

The excess of the consideration transferred, in respect of the amount of any non-controlling interest in the acquiree and
the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net
assets acquired is recorded as goodwill. If the total consideration transferred, non-controlling interest recognized and
previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a
bargain purchase, the difference is recognized directly in profit or loss.

Inter-company transactions, balances, income and expenses on transactions between Group companies are eliminated.
Profits or losses resulting from inter-company transactions that are recognized in assets are also eliminated. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the
Group. Acquisition-related costs are expensed as incurred.

(b)     Transactions with non-controlling interests

The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For
purchases from non-controlling interests, the difference between any consideration paid and the relevant share
acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-
controlling interests are also recorded in equity.

When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its
fair value, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for
the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In
addition, any amounts previously recognized in OCI in respect of that entity are accounted for as if the Group had
directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in OCI are
reclassified to profit or loss. If the ownership interest in an associate is reduced but significant influence is retained, only
a proportionate share of the amounts previously recognized in OCI is reclassified to profit or loss where appropriate.

2.4     Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker, who is responsible for allocating resources and assessing the performance of the operating segments.
The chief operating decision-maker has been identified as the Board of Directors.

2.5     Foreign currency translation

(a)     Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the
primary economic environment in which the entity operates. The consolidated financial statements are presented in
Rands, which is the Group's presentation currency and the Company's functional currency. The functional currency of
the Company's subsidiaries, namely BC Dundee, Zinoju, the Trust and BC, is South African Rands (note 5).

(b)     Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognized in profit or loss. Foreign exchange gains and losses are
presented in profit or loss within "other (expense)/income ? net".

2.6     Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and accumulated impairment
losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs
are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance costs are charged to profit or loss during the financial period in which they
are incurred.

Land is not depreciated. Depreciation of mineral rights is calculated using the units-of-production ("UOP") method based
on total run of mine tons of coal expected to be mined per the life-of-mine plan ("LOM"). Depreciation on the remaining
assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over
their estimated useful lives, as follows:

       Buildings                                                       10-20 years
       Development costs                                               5-20 years
       Mining assets                                                   5 to 25 years
       Office equipment and fixtures and fittings                      3 to 10 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial
position date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying
amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in profit or
loss.

Mineral rights

Mineral rights are recorded at cost. This includes costs incurred to explore, sample, drill and perform feasibility tests
when incurred before the research proves the land to be technically feasible and commercially viable, at which point the
costs are reclassified as mining assets within property, plant and equipment. Exploration and evaluation costs incurred
before mineral rights are acquired are expensed in profit or loss. Depreciation of mineral rights is calculated using the
UOP method.

2.7     Intangible assets

Richards Bay Coal Terminal ("RBCT") entitlements

Amortization of the RBCT entitlements is calculated using the UOP method based on total run of mine tons of coal
expected to be mined per the LOM.

2.8     Leased assets

Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership
are classified as finance leases. Finance leases are capitalized at the lower of the fair value of the leased property or the
estimated present value of the underlying lease payment. Each lease payment is allocated between the liability and
finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental
obligations, net of finance charges, are included in interest bearing borrowings. The interest element of the finance
charges is charged to the profit or loss over the lease period. Property, plant and equipment acquired under finance
leasing contracts are depreciated over the useful lives of the assets. Leases in which a significant portion of the risks and
rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating
leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the
period of the lease.

2.9     Impairment of non-financial assets

At least annually, or when events and circumstances warrant a review, the Group reviews the carrying amounts of its
non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss.
The carrying value of an asset is considered to be impaired when the recoverable amount of such an asset is less than its
carrying value. In this instance, a loss is recognized based on the amount by which the carrying value exceeds the
recoverable amount.

The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets (including goodwill) are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market assessments of time value of money and
the risks specific to the asset.

Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm's length transaction between
knowledgeable willing parties, less the costs of disposal.

When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of
its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognized for the asset (cash-generating unit) in prior years. A
reversal of an impairment loss is recognized immediately in profit or loss, unless it relates to goodwill, in which case it is
not reversed.

2.10    Financial instruments

2.10.1 Financial assets

The Group classifies its financial assets in the following categories: at fair value through profit or loss and as loans and
receivables. The classification depends on the purpose for which the financial assets were acquired. Management
determines the classification of its financial assets at initial recognition.

(a)     Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as such
unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled
within twelve months, otherwise they are classified as non-current. The Group's financial assets held for trading
comprise of cash equivalents, endowment policies (which matured during the PY2014 financial year) and other long-
term investments which are included in 'investments in financial assets' in the statement of financial position.

(b)     Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are included in current assets, except for those with maturities greater than twelve months after the
statement of financial position date, which are classified as non-current assets. The Group's loans and receivables
comprise of trade and other receivables, cash and long term receivables, interest and non-interest bearing receivables in
the statement of financial position.

(c)     Recognition and measurement

Regular purchases and sales of financial assets are recognized on the trade-date, being the date on which the Group
commits to purchase or sell the asset. Financial assets carried at fair value through profit or loss are initially recognized
at fair value, and transaction costs are expensed in profit or loss. Loans and receivables are initially carried at fair value
and subsequently at amortized cost using the effective interest rate method.

Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been
transferred and the Group has transferred substantially all risks and rewards of ownership. Gains or losses arising from
changes in the fair value of the financial assets at fair value through profit or loss are presented in profit or loss within
'other (expense)/income ? net'.

(d)     Impairment

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are
considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after
the initial recognition of the financial asset, the estimated future cash flows of the financial asset have been affected.
For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between
the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's
original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for
all financial assets with the exception of trade receivables (Refer to note 2.12).

(e)     Derecognition

The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

2.10.2 Financial liabilities

Financial liabilities are classified as other financial liabilities and include borrowings, RCF loan facilities, loans payable and
trade and other payables. Other financial liabilities are subsequently measured at amortized cost using the effective
interest rate method.

The Group derecognizes financial liabilities when the Group's obligations are discharged, cancelled or they expire. The
difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is
recognized in profit or loss.

2.10.3 Compound financial instruments

Compound financial instruments issued by the Group comprise convertible loans that can be converted to share capital
at the option of the holder. The instrument is classified separately as a financial liability and equity in accordance with
the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for
similar non-convertible instruments. This amount is recorded as a liability on an amortized cost basis using the effective
interest method until extinguished upon conversion or at the instrument's maturity date.

The conversion option classified as equity is determined by deducting the amount of the liability component from the
fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects,
and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the
conversion option is exercised, in which case, the balance recognized in equity will be transferred to issued capital.
When the conversion option remains unexercised at the maturity date of the convertible note, the balance recognized in
equity will be transferred to retained earnings/loss.

No gain or loss is recognized in profit or loss upon conversion or expiration of the conversion option.

Foreign-currency-denominated convertible loans that will be settled by the Company delivering a variable number of its
shares for a fixed amount of foreign currency will be classified as a financial liability. The conversion option is an
embedded derivative, which is separated as it is not closely related to the debt host. Changes in the fair value of the
embedded derivative liability will be recorded in profit or loss.

Transaction costs that relate to the issue of the convertible loans are allocated to the liability and equity components in
proportion to the allocation of the gross proceeds. Transactions costs relating to the equity component are recognized
directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability
component and are amortized over the lives of the convertible loans using the effective interest rate method.

2.10.4 Derivative financial instruments

Derivatives are initially recognized at fair value on the date the derivative contract is entered into and are subsequently
remeasured at their fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is
designated as a hedging instrument. The Group's derivative instruments are not designated as hedging instruments and
do not qualify for hedge accounting. Accordingly, changes in the fair value of the derivative instruments are recognized
immediately in profit or loss within 'Other (expense)/income ? net'.

2.11    Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the
extent that it relates to items recognized directly in equity. In this case, the tax is recognized directly in equity.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
statement of financial position date in the countries where the Company and its subsidiaries operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.

Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax
liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted
for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the
time of the transaction affects neither accounting nor taxable profit or loss.

Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the
statement of financial position date and are expected to apply when the related deferred income tax asset is realized or
the deferred income tax liability is settled. Deferred income tax assets are recognized only to the extent that it is
probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except for deferred
income tax liabilities where the timing of the reversal of the temporary difference is controlled by the Group and it is
probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the
same taxation authority on either the same taxable entity or different taxable entities where there is an intention to
settle the balances on a net basis.

2.12    Trade and other receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective
interest rate method, less provision for impairment. A provision for impairment of trade receivables is established when
there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of
the receivables and is recognized in profit or loss within 'operating expenses'. Significant financial difficulties of the
debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in
payments are considered indicators that the trade receivable is impaired. When a trade receivable is uncollectible, it is
written off against the provision. Subsequent recoveries of amounts previously written off are credited against
'operating expenses' in profit or loss.

2.13    Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first in, first out ("FIFO")
method. The cost of finished goods and work in progress comprises operating costs which are absorbed into stock on
hand, based on the level of extraction during the period in which such stock was mined and the costs incurred during
such period. Overheads are allocated on the same basis. Inventories exclude borrowing costs. Net realizable value is the
estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.14    Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the statement of financial position.

2.15    Share-based payments

The Group operates an equity-settled, share-based compensation plan, under which the entity receives services from
employees and consultants as consideration for equity instruments (options) of the Group. The fair value of the
employee and consulting services received in exchange for the grant of the options is recognized as an expense. The
total amount to be expensed is determined by reference to the fair value of the options granted and is recognized within
profit or loss. At the end of each reporting period, the Group revises its estimates of the number of options that are
expected to vest based on the non-market vesting conditions. It recognizes the impact of the revision in the income
statement, with a corresponding adjustment to equity.

For those options which vest immediately and are subsequently cancelled, the adjustments are made directly in equity
between the reserves and retained loss.

The fair value of common shares issued as compensation is based on the quoted market price.

The fair value of stock options and compensation warrants is determined using the Black-Scholes option-pricing model.
The compensation expense is recognized over the vesting period. At the end of each reporting period, the Group revises
its estimates of the number of options that are expected to vest based on the vesting conditions. The Group recognizes
the impact of the revision to original estimates in profit or loss, with a corresponding adjustment to equity.

When the options and warrants are exercised, the Company issues new shares. The proceeds received, net of any
directly attributable transaction costs, together with any related amount in reserves, are credited to share capital.

2.16    Trade and other payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business
from suppliers. Trade and other payables are classified as current liabilities if payment is due within one year or less (or
in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade
payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest
rate method.

2.17    Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation and the amount has been reliably
estimated. Provisions are not recognized for future operating losses.

The Group's provision for asset retirement obligations ("ARO") is measured at the present value of the amount expected
to be required to settle the obligation using a risk-free rate that reflects the rate of interest on monetary assets that are
essentially free of default risk, adjusted for the effect of any entity's credit standing. Future costs to retire an asset,
including dismantling, remediation and ongoing treatment and monitoring of the site, are recognized and recorded as a
provision for close down rehabilitation costs at fair value in the accounting period in which the legal obligation arising
from the disturbance occurs. The liability is accreted over time through periodic charges to operations. The fair value of
the costs is capitalized as part of the assets' carrying value and amortized over the assets' estimated useful lives.

A restructuring provision is recognized when the Group has developed a detailed formal plan for the restructuring and
has raised a valid expectation in those affected that it will carry out a restructuring by starting to implement the plan or
announcing its main features to those affected by it. The measurement of a restructuring provision includes only the
direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the
restructuring and not associated with ongoing activities of the entity.

2.18    Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of coal in the ordinary course of
the Group's activities. Revenue is shown net of value-added tax, returns, rebates and discounts.

The Group recognizes revenue when the amount of revenue can be reliably measured, it is probable that future
economic benefits will flow to the entity and when specific criteria have been met for each of the Group's activities as
described below.

(a)     Sale of coal

The Group extracts, washes and sells coal. Sales are recognized when the entity has delivered products to the customer,
the customer has full discretion over the products, and there is no unfulfilled obligation that could affect the customer's
acceptance of the products. Delivery does not occur until the products have either been shipped, (for certain foreign
sales), or the date upon which the goods are dispatched to the customer, the risks of obsolescence and loss have been
transferred to the customer, and either the customer has accepted the products in accordance with the sales contract,
or the Group has objective evidence that all criteria for acceptance have been satisfied.

(b)     Interest income

Interest income is recognized on a time-proportion basis using the effective interest rate method. When a receivable is
impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow
discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest
income. Interest income on impaired loans is recognized using the original effective interest rate.

(c)     Other income

Other income is recognized on an accrual basis and comprises primarily foreign exchange gains and losses, profit on sale
of assets and scrap sales.

2.19    Employee benefits

(a)     Defined contribution plans

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The
Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to
pay all employees the benefits relating to employee service in the current and prior periods. The contributions are
recognized as an employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the
extent that a cash refund or a reduction in future payments is available.

(b)     Short-term employee benefits

The cost of short-term employee benefits (those payable within twelve months after the service is rendered), such as
paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical, are recognized in the period in
which the service is rendered and are not discounted.

2.20    Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at
amortized cost using the effective interest rate method, and any difference between proceeds (net of transaction costs)
and the redemption value is recognized in profit or loss over the period of the borrowings.

Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs.
To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is
capitalized as a pre-payment for liquidity services and amortized over the period of the facility to which it relates.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least 12 months after the statement of financial position date.

2.21    Loss per share

Basic loss per common share has been computed by dividing the loss applicable to common shareholders by the
weighted-average number of common shares outstanding during the representative period. Diluted loss per common
share is determined under the assumption that deemed proceeds on the exercise of stock options and other dilutive
instruments are considered to be used to reacquire common shares at the average price for the period with the
incremental number of shares being included in the denominator of the diluted loss per share calculation. The diluted
loss per share calculation excludes any potential conversion of options and warrants that would decrease loss per share.
As at December 31, 2014, outstanding options, loans and warrants, as well as the potential shares issuable with regards
to the RCF convertible loan, referred to in Note 22, were excluded from the diluted loss per share calculation as they
were anti-dilutive.

Headline earnings/(loss) per share is a basis for measuring earnings per share accounts for all the profits and losses from
operational, trading, and interest activities, that have been discontinued or acquired at any point during the year.
Excluded from this figure are profits or losses associated with the sale or termination of discontinued operations, fixed
assets or related businesses, or from any permanent devaluation or write-off of their values. For the CY2014 financial
year, the Company's headline loss per share was adjusted for the profit on sale of property, plant and equipment of
R0,2 million (PY2014: R7,0 million).

2.22    Comparative figures

Certain comparative amounts have been reclassified to conform to the current year's presentation. Due to the change in
financial year-end, the comparative amounts may not be directly comparable for items disclosed in profit or loss.

3       FINANCIAL RISK MANAGEMENT

3.1     Financial risk factors

The Group's activities expose it to a variety of financial risks such as foreign exchange risk, price risk, cash flow interest
rate risk, credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of
financial markets and seeks to minimize potential adverse effects on the Group's financial performance.

Risk management is carried out by head office management under policies approved by the Board of Directors. The
Group identifies, evaluates and manages financial risks in close co-operation with the Group's subsidiaries.

3.2    Market risk

(a)    Foreign exchange risk

The Company's functional currency is the Rand. BC Corp's functional currency was changed on March 1, 2014 from
Canadian Dollars to Rands. This change reduces the exposure of foreign exchange risk on the consolidated financial
statements. The Group operates internationally and is exposed to foreign exchange risk arising from currency exposures
with respect to the US Dollar and Canadian Dollar. The Group's foreign exchange risk arises primarily from the sale of
coal, based on the API 4 coal price index in US Dollars to foreign customers, external loans denominated in US Dollars
and translation differences arising from the translation of share capital and other equity items.

At December 31, 2014, a 10% increase/(decrease) in the period average foreign exchange rate between the Canadian
Dollar and the Rand, would have increased/(decreased) the Group's profit or loss by approximately R4,1 million (PY2014:
R7,0 million).

A 10% increase/(decrease) in the period average foreign exchange rate between the US Dollar and the Rand, would have
increased/(decreased) the Group's profit or loss by approximately R28,1 million (PY2014: R4,1 million).

(b)    Price risk

The Group is exposed to commodity price risk, primarily due to fluctuations in the API 4 coal price index, by which
foreign coal sales are priced. Commodity prices fluctuate on a daily basis and are affected by numerous factors beyond
the Group's control. The supply and demand for commodities, the level of interest rates, the rate of inflation,
investment decisions by large holders of commodities including governmental reserves and stability of exchange rates
can all cause significant fluctuations in commodity prices. Such external economic factors are in turn influenced by
changes in international investment patterns and monetary systems and political developments.

At December 31, 2014, a 10% change in the API 4 coal price index would have resulted in a corresponding change in
export coal revenue of approximately R13,9 million (PY2014: R30,9 million).

(c)    Cash flow interest rate risk

The Group's interest rate risk arises from deposits held with banks and interest-bearing liabilities. Borrowings issued at
variable rates expose the Group to cash flow interest rate risk which is partially offset by cash held at variable rates.
During CY2014 and PY2014 the Group's borrowings at variable rates were denominated in South African Rands.

Based on the simulations performed, the impact on profit or loss of a 1% shift of interest rates on borrowings would be a
maximum increase/(decrease) in profit or loss of R1,4 million (PY2014: R1,6 million).

3.3     Credit risk

Credit risk is managed at a Group level, except in respect of trade receivables which are managed at an operational level.

Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit
exposures to customers, including outstanding receivables and committed transactions (refer notes 14 and 30,
respectively). The Group only transacts with high quality financial institutions.

Risk control assesses the credit quality of customers, taking into account their financial position, past experience and
other factors. The utilization of credit limits is regularly monitored. No credit limits were exceeded during the reporting
period, and management does not expect any losses from non-performance by these counterparties.

Restricted cash totalling R11,2 million was on deposit with First National Bank ("FNB") to be released to the relevant
counterparties if payments are not made to them (note 17).

3.4     Liquidity risk

Cash flow forecasting is performed by Group finance. Group finance monitors rolling forecasts of the Group's liquidity
requirements to ensure it has sufficient cash to meet operational needs. Such forecasting takes into consideration the
Group's debt/equity financing plans, covenant compliance and external legal requirements.

Below is an analysis of the Group's non-derivative financial liabilities disclosed in maturity groupings based on the
remaining period at the statement of financial position date to the contractual maturity date. The amounts disclosed in
the table are the contractual undiscounted cash flows.

                                                   Between 1 and 5   Greater than 5   
                           Not later than 1 year             years            years   
At December 31, 2014                                                                  
Borrowings                             6 000 000        96 000 000       60 228 930   
RCF loan facilities                            -       264 970 212                -   
Trade and other payables             170 506 885                 -                -   
At February 28, 2014                                                                  
Borrowings                            65 577 920        91 228 070                -   
RCF loan facilities                   42 922 381        64 383 572                -   
Trade and other payables             170 161 406                 -                -   

3.5    Capital risk management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in
order to provide returns for shareholders and benefits for other stakeholders. In order to maintain or adjust the capital
structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new
shares or sell assets to reduce debt.

Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is
calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-
current borrowings as shown in the consolidated statements of financial position) less cash and cash equivalents. Total
capital is calculated as "equity" as shown in the consolidated statements of financial position plus net debt.

The gearing ratios at December 31, 2014 and February 28, 2014 were as follows:

                                         December 31,   February 28,   
                                                 2014           2014   
Total borrowings                          333 497 243    256 245 384   
Less: Cash and cash equivalents          (12 120 081)   (14 582 999)   
Net debt                                  321 377 162    241 662 385   
Total equity                              244 600 498    328 723 841   
Total capital                             565 977 660    570 386 226   
Gearing ratio (net debt/total capital)            57%            42%   

Included within total borrowings is a convertible loan of R265,0 million (PY2014: R64,4 million). The Company's capital
management objectives, policies and processes have remained unchanged during the year ended December 31, 2014
except for the Investec Bank Limited ("Investec") loan as discussed in note 21 and the RCF loan facilities as discussed in
note 22.

The Company is not subject to any externally imposed capital requirements with the exceptions as discussed in note 21
and 22 and with regards to Section 710 of the TSX Company Manual which requires adequate working capital or financial
resources such that, in the opinion of the TSX, the listed issuer will be able to continue as a going concern. The TSX will
consider, among other things, the listed issuer's ability to meet its obligations as they come due, as well as its working
capital position, quick asset position, total assets, capitalization, cash flow and earnings as well as accountant's or
auditors' disclosures in financial statements regarding the listed issuer's ability to continue as a going concern.
Management has concluded that the Company has met the requirements of the TSX at December 31, 2014.

3.6   Fair value estimation

Financial instruments carried at fair value are assigned to different levels of the fair value hierarchy, by valuation
method. The different levels have been defined as follows:

-     Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
-     Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
      (that is, as prices) or indirectly (that is, derived from prices) (level 2).
-     Inputs for the asset or liability that are not based on observable market data (that is unobservable inputs) (level 3).

The following table presents the group's financial assets and liabilities that are measured at fair value at December 31,
2014 and February 28, 2014:

                                      Level 1        Level 2   Level 3   
                                            R              R         R   
December 31, 2014                                                        
Investment in financial assets     29 134 182              -         -   
Conversion option liability                       54 088 555         -   
Warrant liability                           -      8 818 534         -   
February 28, 2014                                                        
Investment in financial assets     23 586 748              -         -   
Conversion option liability                 -      7 828 422         -   


4       CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of the consolidated financial statements in conformity with IFRS requires the Group's management to
make judgments, estimates and assumptions about future events that affect the amounts reported in the consolidated
financial statements and related notes thereto. Although these estimates are based on management's best knowledge
of the amounts, events or actions, actual results may differ from those estimates and these differences could be
material. The areas which require management to make significant judgments, estimates and assumptions in
determining the carrying values and amounts include, but are not limited to:

4.1     Provisions

Significant judgement and use of assumptions is required in determining the Group's provisions. Management uses its
best estimates based on current knowledge in determining the amount to be recognized as a provision. Key assumptions
utilized in the determination of the rehabilitation provision, which is measured at fair value, include the estimated life of
mine, estimates of reserves and discount rates. Fair value is determined based on the net present value of estimated
future cash expenditures for the settlement of the liability that may occur upon decommissioning of the mine. Such
estimates are subject to change based on changes in laws and regulations and negotiations with regulatory authorities.
The Group's restructuring provision is based on management's best estimate of the number of employees to be
retrenched and the related severance pay which the Group reasonably expects to incur in the forthcoming financial year.

4.2     Property, plant and equipment, mineral rights and other intangible assets

The Group makes use of experience and assumptions in determining the useful lives and residual values of property,
plant and equipment, mineral rights and other intangible assets (other than goodwill). Management reviews annually
whether any indications of impairment exist. Information that the Group considers includes changes in the market,
economic and legal environment in which the Group operates as well as internal sources of information. Estimates
include but are not limited to estimates of the discounted future after-tax cash flows expected to be derived from the
Company's mining properties, costs to sell the properties and the appropriate discount rate. Reductions in metal price
forecasts, increases in estimated future costs of production, increases in estimated future capital costs, depreciation of
the US Dollar relative to the Rand, reductions in the amount of recoverable mineral reserves and mineral resources
and/or adverse current economics could result in a write-down of the carrying amounts of the Group's assets.

As of December 31, 2014, based on management's estimate of the recoverable amount of the BC Dundee Group, an
impairment loss of R79,7 million was recorded, which was in addition to the impairment of Magdalena opencast assets
amounting to R11,2 million (note 7). The impairment loss resulted in the write down of certain intangible assets and
property, plant and equipment. If the discount rate had been 1% higher than management's estimates, the Group would
have recorded a further impairment of approximately R34,0 million. If the API 4 coal price index had been 5% lower than
management's estimates, the Group would have recognized a further impairment of R90 million. An impairment loss of
R152,0 million was recorded at February 28, 2014 as a result of management's review, which resulted in the impairment
of goodwill and certain intangible assets.

4.3    Capitalization of exploration and evaluation costs

Management has determined that exploration and evaluation costs incurred during the year have future economic
benefits and are economically recoverable. In making this judgment, management has assessed various sources of
information including but not limited to the geological and metallurgic information, history of conversion of mineral
deposits to proven and probable mineral reserves, scoping and feasibility studies, proximity of operating facilities,
operating management expertise and existing permits.

4.4    Income taxes and recoverability of potential deferred tax assets

In assessing the probability of realizing deferred tax assets recognized, management makes estimates related to
expectations of future taxable income, applicable tax planning opportunities, expected timing of reversals of existing
temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax
authorities. In making its assessments, management gives additional weight to positive and negative evidence that can
be objectively verified. Estimates of future taxable income are based on forecast cash flows from operations and the
application of existing tax laws in South Africa.

4.5    Share-based payments

Management determines costs for share-based payments using market-based valuation techniques. The fair value of the
market-based and performance-based share awards are determined at the date of grant using generally accepted
valuation techniques. Assumptions are made and judgments are used in applying valuation techniques. These
assumptions and judgments include estimating the future volatility of the stock price, expected dividend yield, future
employee turnover rates and future employee stock option exercise behaviors and corporate performance. Such
judgments and assumptions are inherently uncertain. Changes in these assumptions could materially affect the fair value
estimates.

4.6    Compound financial instruments

The Group has entered into agreements in the form of foreign-currency-denominated convertible loans and warrants
which are accounted for as compound financial instruments. The fair value of the embedded derivative liabilities
(conversion option liability and warrant liability) are determined at the date of the transaction and are fair valued at
each reporting date through profit or loss using generally accepted valuation techniques. Assumptions are made and
judgements are used in applying valuation techniques.

Such judgements and assumptions are inherently uncertain. Changes in these assumptions could materially affect the fair
value estimates.

4.7     Mineral reserve estimates

The figures for mineral reserves and mineral resources are determined in accordance with National Instrument 43-101,
"Standards of Disclosure for Mineral Projects", issued by the Canadian Securities Administrators. There are numerous
uncertainties inherent in estimating mineral reserves and mineral resources, including many factors beyond the Group's
control. Such estimation is a subjective process, and the accuracy of any mineral reserve or mineral resource estimate is
a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering
and geological interpretation. Differences between management's assumptions including economic assumptions such as
coal prices, foreign exchange rates and market conditions could have a material effect on the Group's reserves and
resources, and as a result, could also have a material effect on the Group's financial position and results of operation.

4.8     Going concern assumption

The consolidated financial statements have been prepared on the basis of accounting principles applicable to a going
concern, which assume that the Group will continue in operation for the foreseeable future and will be able to realize its
assets and discharge its liabilities in the normal course of operations. If the going concern assumption was not
appropriate for these consolidated financial statements then adjustments would be necessary to the carrying values of
assets and liabilities, the reported revenues and expenses, and the statement of financial position classifications. Such
adjustments could be material.

4.9     Contingencies

Refer to note 30.

5      CHANGE IN FUNCTIONAL AND PRESENTATION CURRENCY

Functional currency

Due to the closure of the Toronto, Canada office during PY2014 and the transfer of all functions to the Johannesburg,
South Africa office, management has concluded that the most appropriate functional currency of the parent company,
BC Corp, is Rands. Previously, the functional currency of BC Corp was Canadian Dollars. The functional currency of the
subsidiaries continues to be Rands. This change has been accounted for prospectively from March 1, 2014. All assets,
liabilities and equity were translated into Rands at the exchange rate on March 1, 2014. As a result, the cumulative
currency translation differences which had arisen up to the date of change of functional currency were reallocated to
other components within equity.

Presentation currency

Subsequent to the Group restructuring in PY2014, BC Corp is effectively managed in South Africa, the majority of the
transactions are conducted in Rands by its major subsidiary, and monthly reporting to management and the Board of
Directors is reflected in Rands. Effective March 1, 2014, the presentation currency of the Group was changed from
Canadian Dollars to Rands. The change in presentation currency represents a voluntary change in accounting policy,
which has been applied retrospectively. Comparative information, for PY2014 and fiscal year 2013 were translated from
Canadian Dollars to Rands using the procedures outlined below:

-     assets and liabilities were translated into Rands at each period-end closing rate of exchange;
-     income and expenses were translated into Rands at average rates of exchange for each period as the average rate
      was considered a suitable proxy for the prevailing rates at the dates of the transactions;
-     differences resulting from the retranslation on the opening net assets and the results for each period have been
      taken to OCI;
-     share capital, share premium and other reserves were translated at the closing rate of exchange prevailing at
      each period-end closing rate; and
-     accumulated retained losses were translated at the average rates of exchange for each period.

The exchange rates used were:

               PY2014     2013   
                 C$:R     C$:R   
Average rate   9.5415   8.3631   
Closing rate   9.6899   8.8261   

6   NATURE OF EXPENSES                                                                                      
                                                                      10 months ended     12 months ended   
                                                                    December 31, 2014   February 28, 2014   
Raw materials and consumables                                              46 108 148          47 174 360   
Changes in inventories                                                    150 086 649          99 798 041   
Mining overheads                                                            5 742 492          11 023 897   
Mining sub-contractors                                                      9 718 650                   -   
Depreciation and amortization                                              75 463 018         100 609 395   
Repairs and maintenance                                                    72 481 559          72 796 442   
Salaries and wages                                                        203 065 653         208 040 779   
Social development expenditure                                              3 721 371           3 570 729   
Royalty tax expense                                                         4 662 862           5 620 405   
Movement in provision for bad debts                                       (1 687 032)           1 804 291   
Auditor's remuneration                                                      1 282 668           3 984 021   
Write-down of inventory to net realizable value                            23 170 501           9 892 478   
Transport costs - internal                                                 22 388 965          29 584 870   
Railage, handling and wharfage                                             46 728 724         129 323 339   
Legal, consulting and other professional fees                              17 614 447          34 249 249   
Shareholder communication and listing fees                                  1 589 432           2 248 096   
Stock-based compensation                                                      302 734           3 316 760   
Other expenses                                                             15 536 487          29 817 802   
Total                                                                     697 977 328         792 854 954   
Cost of sales                                                             637 994 418         710 985 206   
General and administration expenses                                        59 982 910          81 869 748   
Total                                                                     697 977 328         792 854 954   

7   OTHER (EXPENSE)/INCOME ? NET                                                                            
                                                                      10 months ended     12 months ended   
                                                                    December 31, 2014   February 28, 2014   
Foreign exchange (loss)/gain - net                                        (6 964 082)        (16 636 477)   
Impairment of escrow funds                                                          -        (19 427 033)   
Impairment of goodwill, intangible assets and property, plant and                                           
equipment                                                                (90 882 250)       (152 007 765)   
Net profit on disposal of property, plant and equipment                       238 843           6 558 810   
Scrap sales                                                                   732 682             677 880   
Insurance proceeds                                                          3 556 563                   -   
Fair value adjustment on financial assets                                   1 793 054           3 646 065   
Unrealized marked-to-market loss on securities                               (96 974)           (307 945)   
Fair value adjustment on conversion option and warrant liability           66 979 331           2 129 444   
Other income                                                                2 084 783           3 455 223   
Total                                                                    (22 558 050)       (171 911 798)   

7       OTHER (EXPENSE)/INCOME ? NET

Impairment loss

The impairment loss of R90,9 million relates to the impairment of development costs and mining assets of R11,2 million
as a result of the Magdalena opencast operation coming to the end of its reserve in early 2015 and R79,7 million relating
to the impairment of property, plant and equipment which were impaired as the carrying value of the BC Dundee Group
exceeded the estimated recoverable amount. As of December 31, 2014, management identified indicators of
impairment which existed at that date and determined the recoverable amount of the BC Dundee Group on a fair value
less costs to sell basis. The fair value calculation was determined using pre-tax cash flow projections on constant terms,
based on the BC Dundee Group's LOM.

The fair value calculation is categorised as level 3 in terms of the fair value hierarchy. A significant portion of the inputs
into the model were unobservable, as defined, and were based on Company specific assumptions. The key assumptions
used in the pre-tax cash flow projection are as follows: estimates of future production based on a LOM model,
assuming that all production is sold and using forecast macro assumptions, such as the API 4 coal index, which are based
on observable market expectations. The pre-tax discount rate was determined by calculating the Company's weighted
average cost of capital which was based on peer company information and other observable market inputs.

During PY2014, an impairment loss of R152,0 million was recognized. The recoverable amount was determined based on
a fair value less costs to sell basis. The fair value calculation was determined using pre-tax cash flow projections based on
the BC Dundee Group's projected LOM. There was no change in the valuation techniques from PY2014 to CY2014.

There was significant estimate and judgment used when performing the fair value calculation (note 4.2 and 4.7). The key
assumptions used in the fair value less costs to sell calculations for CY 2014 and PY2014 are as follows:

                                                                            December 31, 2014   February 28, 2014   
Pre-tax discount rate                                                                  12.37%              20.20%   
Gross fair value                                                               R550,5 million      R539,7 million   
Costs to sell                                                                   R11,0 million       R10,7 million   
Recoverable amount                                                             R539,5 million      R529,1 million   

8   FINANCE INCOME AND EXPENSE                                                                                      
                                                                              10 months ended     12 months ended   
                                                                            December 31, 2014   February 28, 2014   
Finance income                                                                                                      
Cash and restricted cash                                                            1 073 085           3 236 090   
Total                                                                               1 073 085           3 236 090   
Finance expense                                                                                                     
Interest on borrowings                                                           (11 951 006)        (17 326 650)   
Interest on the RCF loan facilities                                              (17 207 498)         (2 929 696)   
Unwinding discount on asset retirement obligation                                   (501 371)         (1 501 267)   
Loan accretion                                                                    (7 651 686)         (2 421 145)   
Other                                                                               (113 764)           (166 265)   
Total                                                                            (37 425 325)        (24 345 023)   

9   INCOME TAX  

Income tax expense is comprised as follows:                                                                                                         
                                                                              10 months ended         12 months ended   
                                                                            December 31, 2014       February 28, 2014   
Current tax:                                                                                                            
Prior year over provision - South Africa                                          (8 094 166)                       -   
Deferred taxes - current year timing differences                                   62 699 746              19 396 655   
Income tax benefit                                                                 54 605 580              19 396 655   

The major items causing the Company's income tax expense to differ from the South African statutory rate of 28%   
(PY2014: 28%) are as follows:   
                                                                                        
Loss before income taxes                                                        (163 046 392)           (297 461 181)   
Expected tax benefit at statutory tax rates                                        45 652 990              83 289 131   
Adjustments resulting from:                                                                                             
Benefits of tax losses not recognized                                               (319 439)            (40 043 643)   
Income not subject to tax                                                           1 641 771               2 907 670   
Permanent differences                                                             (4 078 714)             (4 052 342)   
Foreign tax rate differential                                                         539 914             (2 537 843)   
Prior year over provision                                                         (8 094 165)                       -   
Other temporary differences                                                        19 263 223            (20 166 318)   
Income tax benefit                                                                 54 605 580              19 396 655   

10   PROPERTY, PLANT AND EQUIPMENT

                                                                    Office                                                     
                                                                equipment,   Development                                       
                                   Land and                   fixtures and         costs                                       
                                  buildings   Mining assets       fittings   capitalized      Mineral rights           Total   
Year ended December 31, 2014                                                                                                   
Opening net book value            6 966 158     260 921 275      3 462 410    48 296 077         255 575 004     575 220 924   
Additions                           244 307     143 965 742        223 061    12 421 787                   -     156 854 897   
Change in asset retirement                                                                                                     
obligation                                -    (12 710 950)              -             -                   -    (12 710 950)   
Disposals                                 -     (3 121 686)              -             -                   -     (3 121 686)   
Impairment loss                           -     (3 632 317)              -   (7 561 274)        (69 200 951)    (80 394 542)   
Depreciation                      (461 009)    (59 916 714)    (1 108 121)   (3 248 245)         (9 710 637)    (74 444 726)   
Net book value at end of year     6 749 456     325 505 350      2 577 350    49 908 345         176 663 416     561 403 917   
Year ended December 31, 2014                                                                                                   
Cost                              9 444 705     704 393 499      7 417 420    58 188 044         328 943 757   1 108 387 426   
Accumulated depreciation        (2 695 249)   (378 888 149)    (4 840 070)   (8 279 699)       (152 280 342)   (546 983 510)   
Net book value at end of year     6 749 456     325 505 350      2 577 350    49 908 345         176 663 415     561 403 916   
 
Year ended February 28, 2014                                                                                                
Opening net book value            7 819 422     294 507 831      3 471 782    51 725 280      258 503 238     616 027 553   
Additions                           128 591      44 733 241        256 101     3 560 183       12 000 000      60 678 116   
Change in asset retirement                                                                                                  
obligation                                -         860 072              -             -                -         860 072   
Disposals                                 -       (414 935)      (218 127)             -                -       (633 062)   
Foreign currency translation                                                                                                
adjustment                        (334 284)       2 502 434      1 196 407   (4 314 700)      (1 401 247)     (2 351 390)   
Depreciation                      (647 571)    (81 267 368)    (1 243 753)   (2 674 686)     (13 526 988)    (99 360 366)   
Net book value at end of year     6 966 158     260 921 275      3 462 410    48 296 077      255 575 003     575 220 923   
Year ended February 28, 2014                                                                                                
Cost                              9 200 397     597 221 396      7 194 357    53 969 851      328 934 000     996 520 001   
Accumulated depreciation        (2 234 239)   (336 300 121)    (3 731 947)   (5 673 774)     (73 358 997)   (421 299 078)   
Net book value at end of year     6 966 158     260 921 275      3 462 410    48 296 077      255 575 003     575 220 923   

Office equipment includes items to the value of R0,3 million (PY2014: R0,4 million) that are not directly used in
production and operations and relate to property, plant and equipment in the Company's branch in South Africa. All
property, plant and equipment is located in South Africa. Depreciation expense of R74,4 million (PY2014: R99,4 million)
was recognized in 'cost of sales'.

The impairment loss of R80,4 million relates to the impairment of development costs and mining assets of R11,2 million
as a result of the Magdalena opencast operation coming to the end of its reserve in early 2015 and R69,2 million as a
result of the impairment review performed by management (note 7).

11   INTANGIBLE ASSETS                                                                             
                                                    Goodwill   RBCT entitlements           Total   
Year ended December 31, 2014                                                                       
Opening net book value                                     -          11 506 000      11 506 000   
Impairment loss                                            -        (10 487 708)    (10 487 708)   
Amortization                                               -         (1 018 292)     (1 018 292)   
Net book value at end of year                              -                   -               -   
At December 31, 2014                                                                               
Cost                                             132 331 776          35 321 000     167 652 776   
Accumulated amortization and impairment loss   (132 331 776)        (35 321 000)   (167 652 776)   
Net book value at end of year                              -                   -               -   

                                                    Goodwill   RBCT entitlements           Total   
Year ended February 28, 2014                                                                       
Opening net book value                           134 508 493          32 803 013     167 311 506   
Impairment loss                                (132 331 780)        (19 675 985)   (152 007 765)   
Amortization                                               -         (1 249 029)     (1 249 029)   
Foreign currency translation adjustment          (2 176 713)           (371 999)     (2 548 712)   
Net book value at end of year                              -          11 506 000      11 506 000   
At February 28, 2014                                                                               
Cost                                             132 331 776          35 321 000     167 652 776   
Accumulated amortization and impairment loss   (132 331 776)        (23 815 000)   (156 146 776)   
Net book value at end of year                              -          11 506 000      11 506 000   

All intangible assets originate from South Africa. Amortization expense of R1,0 million (PY2014: R1,2 million) was
recognized in 'cost of sales'.

The impairment loss of R10,5 million (PY2014: R19,7 million) was recognized as a result of management's impairment
review as of December 31, 2014 and February 28, 2014 (note 7).

12     INVESTMENT IN FINANCIAL ASSETS

                                                                    December 31, 2014   February 28, 2014   
Long-term investments                                                      28 967 044          23 327 194   
Security investments                                                          167 138             259 554   
Total                                                                      29 134 182          23 586 748   
The movement in the investment in financial assets is as follows:                                           
Opening balance                                                            23 586 748          39 936 514   
Current year contributions                                                  3 846 794           7 843 936   
Fair value adjustment                                                       1 793 054           3 646 065   
Unrealized marked-to-market loss on securities                               (96 974)           (307 945)   
Policies matured                                                                    -        (27 120 504)   
Effect of foreign currency exchange difference                                  4 560              35 569   
Currency translation adjustments                                                    -           (446 887)   
Closing balance                                                            29 134 182          23 586 748   


The investment in financial assets consists of long-term investments, held by the Group to fund payment requirements
associated with its rehabilitation obligations, and security investments. The long-term investments are held by the Trust
which was formed with the sole purpose of applying its property for the rehabilitation of land in order to discharge the
statutory obligations of Zinoju. The security investments may only be used by Zinoju to carry out the statutory
obligations as and when so required. Changes in the fair values of the investments are recorded in 'other (expense)/
income -net' within profit or loss.

13   DEFERRED TAX     
                                                                             
South Africa                                               December 31, 2014   February 28, 2014   
Deferred income tax liabilities:                                                                   
At beginning of year                                            (78 338 597)        (86 958 524)   
Current year timing differences                                   33 601 258         (6 792 495)   
Effect of foreign currency exchange difference                             -          19 235 131   
Foreign currency translation adjustment                                    -         (3 822 709)   
At end of year                                                  (44 737 339)        (78 338 597)   
Deferred tax asset:                                                                                
At beginning of year                                              31 134 346           3 778 533   
Current year timing differences                                   29 098 581          27 398 667   
Foreign currency translation adjustment                                    -            (42 854)   
At end of year                                                    60 232 927          31 134 346   
Deferred tax asset/(liability) - net                              15 495 588        (47 204 251)   

The above balance is comprised of the following:                                                   

Provisions                                                         8 478 229           9 524 019   
Deferred revenue                                                           -           8 360 531   
Tax losses                                                        77 490 022          33 448 946   
Property, plant and equipment and other long-term assets        (70 159 975)        (97 681 177)   
Other                                                              (312 688)           (856 570)   
At end of year                                                    15 495 588        (47 204 251) 
  
Canada                                                     December 31, 2014   February 28, 2014   
Deferred income tax liabilities:                                                                   
At beginning of year                                                       -                   -   
Current year timing differences                                  (9 458 273)                   -   
At end of year                                                   (9 458 273)                   -   
Deferred tax asset:                                                                                
At beginning of year                                                       -                   -   
Current year timing differences                                    9 458 273                   -   
At end of year                                                     9 458 273                   -   
Deferred tax asset/(liability) - net                                       -                   -   

The above balance is comprised of the following:                                                   

Canada                                                     December 31, 2014   February 28, 2014   
Tax losses                                                         9 458 273                   -   
Other                                                            (9 458 273)                   -   
At end of year                                                             -                   -   

No tax benefit has been recognized for the following temporary differences:

Canada                                                     December 31, 2014   February 28, 2014   
Tax losses (expiring between 2027 and 2034)                      143 970 672         172 433 494   
Other                                                             35 874 684          50 307 055   
Total                                                            179 845 356         222 740 549   
Total C$                                                          18 013 898          22 987 732   

As at December 31, 2014, the Company had an unrecognized deferred tax asset of approximately R135,0 million
(PY2014: R44,0 million) relating to investments in subsidiaries that has not been recognized because the Company
controls the timing of the reversal of the temporary differences and it is probable that these differences will not reverse
in the foreseeable future.

14      TRADE AND OTHER RECEIVABLES

                                                           December 31, 2014   February 28, 2014   
Non-current other receivables:                                                                     
- Deposits                                                        14 238 959           3 907 685   
Total non-current other receivables                               14 238 959           3 907 685   
Current trade and other receivables:                                                               
- Trade receivables                                               79 522 493          64 765 014   
Less: Provision for impairment of receivables                      (969 478)         (2 655 629)   
- Trade receivables - net                                         78 553 015          62 109 385   
- Value-Added Tax (VAT)                                           13 703 448           9 683 398   
- Prepayments                                                      2 641 470           4 957 944   
- Harmonized Sales Tax (HST)                                         107 263             618 013   
- Other receivables                                                  469 763             228 338   
Total current trade and other receivables                         95 474 959          77 597 078   

The fair values of trade and other receivables approximate their carrying values. The maximum exposure to credit risk at
the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any
collateral as security. There is no significant concentration of credit risk in respect of any particular customer.

Included in the non-current deposits as of December 31, 2014 are deposits for equipment which will be funded by RCF
(note 22).

The carrying amounts of the Group's trade and other receivables are denominated in the following currencies:

                                          December 31, 2014   February 28, 2014   
CAD                                                 557 393           3 173 258   
USD                                               6 396 228                   -   
Rands                                            88 521 338          74 423 820   
Total                                            95 474 959          77 597 078   

Movements on the Group's provision for impairment of receivables are as follows:

                                          December 31, 2014   February 28, 2014   
Opening balance                                   2 655 629             862 884   
Provision (released)/raised                     (1 686 151)           1 776 372   
Foreign currency translation adjustment                   -              16 373   
Closing balance                                     969 478           2 655 629   


The creation and release of the provision for impairment of trade receivables has been included in profit or loss. The
other classes within trade receivables do not contain impaired assets.

15     INVENTORIES

                                          December 31, 2014   February 28, 2014   
Consumables                                       2 293 150           2 855 421   
Work in progress                                  3 262 337           5 688 520   
Finished goods                                   21 479 480          64 832 294   
Total                                            27 034 967          73 376 235   

A portion of finished goods inventory was written down to net realizable value during the current financial year. A
write-down of R23,2 million (PY2014: R9,9 million) was recognized in 'cost of sales' within profit or loss. Depreciation of
R1,0 million (PY2014: R2,7 million) is included within inventory at December 31, 2014. The amount of inventories
recognized as an expense during CY2014 is R552,9 million (PY2014: R510,0 million).

16      INTEREST AND NON-INTEREST BEARING RECEIVABLES

                                                          December 31, 2014   February 28, 2014   
Interest bearing receivables:                                                                     
Deposit with respect to cancelled transaction (note 28)                   -          29 140 388   
Non-interest bearing receivables:                                                                 
Other receivables                                                 1 587 765           1 504 434   

The non-interest bearing receivables are unsecured, interest free and have no fixed terms of repayment.

17    RESTRICTED CASH

Restricted cash comprises of deposits of R3,2 million (PY2014: R3,2 million) with FNB in respect of guarantees provided
to the Department of Mineral Resources ("DMR") and Eskom, R8,0 million (PY2014: R8,0 million) deposit with FNB for
guarantees to Transnet Freight Rail ("TFR") and RNil (PY2014: R6,2 million) related to amounts ceded to RCF as security
for the original convertible and bridge loan facilities (note 22).

In the prior financial year, as security for the original convertible and bridge loan facilities provided by RCF to the
Company (note 22), BC Dundee ceded all rights, titles and interest in the anthracite stockpile at July 31, 2013 as well as a
bank account into which the proceeds from the sale of such anthracite stock pile were deposited. Effective July 3, 2014
and in terms of the amended and restated loan agreement with RCF ("Amended RCF Agreement"), the Company was
released from this security (note 22).

18    CASH AND CASH EQUIVALENTS

                                                   December 31, 2014   February 28, 2014   
Cash in bank                                              12 120 081          14 582 999   
Cash is denominated in the following currencies:                                           
CAD                                                          306 868           4 332 085   
USD                                                        2 195 326           1 042 750   
ZAR                                                        9 617 887           9 208 164   
Total                                                     12 120 081          14 582 999   


19   SHARE CAPITAL

                                                                      Number of shares   Stated value   
Opening balance at March 1, 2013                                            34 386 035    859 151 468   
Shares issued in relation to RCF convertible loan                            3 041 047      5 607 185   
Other comprehensive gain for the year due to change in presentation                                     
currency                                                                             -     84 057 799   
Balance at February 28, 2014                                                37 427 082    948 816 452   
Shares issued in relation to RCF convertible loan                           20 119 629     24 014 735   
Cancellation of shares in escrow                                           (1 350 000)   (34 864 745)   
Balance at December 31, 2014                                                56 196 711    937 966 442   

The Company is authorized to issue an unlimited number of common shares of the Company ("Common Shares") at no
par value.

On July 3, 2014, BC Corp closed the final tranche of the US$25,0 million convertible loan facility with RCF (note 22). RCF
received a 5% establishment fee payable in cash or Common Shares. The Company issued 5 531 120 Common Shares at
a price of C$0.1446 per share to settle the establishment fee.

The Company issued 9 264 060 Common Shares to RCF to settle the interest owing as per the Amended RCF Agreement
for the period between July 3, 2014 and December 31, 2014. The Common Shares were issued at prices per share
ranging between C$0.0982 and C$0.1308, being the 20-day volume weighted average prices ("VWAP") as at the dates
the payments were due.

Prior to the closing of the final tranche of the Amended RCF Agreement, the Company issued Common Shares to RCF in
terms of the original convertible loan facility of US$6,0 million ("RCF Original Convertible Loan") and the bridge loan
facility of US$4,0 million ("RCF Bridge Loan"). For the period between March 1, 2014 and June 30, 2014 the Company
issued 5 324 449 shares at prices per share ranging between C$0.0787 to C$0.1247, being the 20-day VWAP as at the
dates the payments were due.

In PY2014, the Company issued 517 450 Common Shares to RCF at a price of C$0.36 per share to settle the 3%
establishment fee on the RCF Original Convertible Loan and 1 537 897 Common Shares at a price of C$0.1446 per share
to settle the 5% establishment fee on the RCF Bridge Loan. Additionally, interest on the RCF Original Convertible Loan for
the periods ended September 30, 2013 and December 31, 2013 was settled in Common Shares. The Company issued
985 700 Common Shares at prices per share ranging between $0.1560 and $0.2371, being the 20-day VWAP as at the
dates the payments were due.

20     RESERVES

                                                                 Weighted average                      
                                          Number of options   exercise price (C$)   Value of options   
Opening balance at March 1, 2013                  2 730 000                  3.18         54 211 275   
Granted and vested                                2 347 500                  0.29          3 316 760   
Expired/cancelled                               (1 855 000)                     -       (38 682 761)   
Foreign currency translation adjustment                   -                     -          1 953 080   
Balance at February 28, 2014                      3 222 500                  0.94         20 798 354   
Granted and vested                                  375 000                  0.11            302 734   
Expired/cancelled                               (1 090 250)                     -       (10 574 992)   
Closing balance at December 31, 2014              2 507 250                  0.70         10 526 096   

Employee share options plan

The Company has an ownership-based compensation scheme, administered by the Board of Directors of the Company,
for directors, officers, employees and consultants. The plan provides for the issuance of share options to acquire up to
10% of the Company's issued and outstanding capital. The number of shares reserved for issuance pursuant to the grant
of share options will increase as the Company's issued and outstanding share capital increases. In accordance with the
terms of the plan, as approved by shareholders at a previous annual general meeting, directors; officers; employees and
consultants of the Company may be granted options to purchase Common Shares at an exercise price determined by the
Board of Directors, but which shall not be lower than the market price of the underlying Common Shares at the time of
grant. Each employee share option converts into one Common Share of the Company on exercise. No amounts are paid
or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights.
Options may be exercised at any time from the date of vesting to the date of their expiry.

On August 12, 2014, 375 000 (PY2014: 2 347 500) share options were granted to directors of the Company vesting
immediately. On September 29, 2014, the vesting terms of the options granted were modified whereby the options, of
each eligible director, would vest over a two-year period, with a portion vesting immediately, and the balance vesting
equally on August 12, 2015 and 2016.

In terms of IFRS 2, Share-based payments, as the modification was not considered "beneficial to the employee", the
accounting treatment for the full value of the grant at date of grant remained, as if the modification had not occurred.
The fair value of these stock options was estimated to be R0,3 million (PY2014: R3,3 million) using the Black-Scholes
option pricing model. Refer below for the assumptions used in the valuation model.

An amount of R0,3 million (PY2014: R1,7 million) is included in profit or loss as stock-based compensation expense
related to the fair value of the portion of options vested during the period for directors, officers and consultants
engaged at the corporate level. An amount of RNil (PY2014: R1,6 million) is included in profit or loss as stock-based
compensation within cost of sales and is related to the fair value of the portion of options vested during the period for
officers, employees and consultants engaged at the site level. The options expire five years from the date of issue, or 
30 days after the resignation of the director, officer, employee or consultant.

Share options outstanding at the end of the financial year have the following exercise prices:

Grant date        Exercise price (C$)   December 31, 2014   February 28, 2014   
15 March 2010                    2.80              50 000             190 000   
13 October 2010                  3.25                   -              25 000   
24 March 2011                    4.10              75 000             120 000   
06 June 2011                     3.00                   -             100 000   
13 June 2011                     2.77             150 000             150 000   
25 January 2012                  1.80             200 000             300 000   
13 August 2013                   0.29           1 657 250           2 337 500   
12 August 2014                   0.11             375 000                   -   
Total                                           2 507 250           3 222 500   


The weighted average remaining contractual life on share options outstanding at December 31, 2014 is 2.92 years
(PY2014: 2.75 years). Out of the 2 507 250 (PY2014: 3 222 500) outstanding, 2 257 251 (PY2014: 3 222 500) were
exercisable. Certain of the options granted and outstanding above expired in the current financial year as part of the
settlement agreement entered into with consultants with regards to the closure of the Company's Toronto office, (note
29). Subsequent to December 31, 2014, 433 500 options expired unexercised.

The salient details of options granted during the current and prior financial years are provided in the table below:

Valuation details                                                               
Grant date                                    12 August 2014   13 August 2013   
Fair value (R)                                       302 734        3 316 760   
Option strike price (C$)                                0.11             0.29   
Share price on grant date (C$)                          0.11             0.29   
Expiry date                                   12 August 2019   13 August 2018   
Remaining contractual life at year-end                  4.62             3.62   
Valuation assumptions:                                                          
Expected volatility (%)                                  102               65   
Expected life of grant                                     5                5   
Annual risk-free interest rate (%)                      1.66             1.88   
Expected dividend yield (%)                                0                0   

Restricted Share Units

The Company approved the adoption of a Restricted Share Unit ("RSU") Incentive Plan. Upon adoption of the new plan,
the Company is authorized to grant and issue RSUs to directors and officers of the Company. Each RSU shall entitle the
director or officer to receive one Common Share upon completion of certain terms. The Common Shares will be
repurchased from the open market and held in trust for subsequent issuance. As of December 31, 2014, R1,0 million
(PY2014: R1,0 million) worth of RSUs were granted but not issued under the plan (note 29).

Black Economic Empowerment option

During the year ended February 29, 2012, BC Dundee assisted one of its BEE partners in buying out the interest in Zinoju
held by its other BEE partner. This resulted in the issuance of a new call option to the continuing BEE partner which
represented the issuance of an equity-settled share-based payment. The value of the new call option on the date of
issue of R9,1 million was reflected as an expense in profit or loss in fiscal 2012 as part of 'Loss on share-based payments'
and as a credit in the statement of changes in equity in the 'share-based payment reserves'.

21      BORROWINGS

Borrowings consist of the following:

                                                                                    December 31, 2014   February 28, 2014   
Instalment sale agreements                                                                          -             808 890   
Investec loan facility                                                                    138 047 902         155 997 480   
Total                                                                                     138 047 902         156 806 370   
Current portion                                                                           (6 000 000)        (65 578 297)   
Long-term portion                                                                         132 047 902          91 228 073  
 
                                                                                    December 31, 2014   February 28, 2014   
(a) Instalment sale agreements                                                                                              
Total amount outstanding                                                                            -             808 890   
Less: Current portion transferred to current liabilities                                            -           (808 890)   
Long-term portion of instalment sale agreements                                                     -                   -  
 
The instalment sale agreements were payable at interest rates linked to prime with a maturity date of April 2014.   

(b) Investec loan facility                                                                                                  
Total amount outstanding                                                                  138 047 902         155 997 481   
Less: Current portion transferred to current liabilities                                  (6 000 000)        (64 769 408)   
Long-term portion of Investec loan facility                                               132 047 902          91 228 073   

On July 3, 2014, BC Dundee finalized a restructuring of the Investec loan facilities on the following terms:

-     five-year senior secured amortizing term loan facility of R90,0 million. The term loan facility accrues interest
      monthly at JIBAR plus 4%, with only interest payable on a quarterly basis up to December 2015. The first principal
      payment is due in December 2015 and thereafter, including interest, on a quarterly basis. The amended and
      restated agreement with Investec ("Amended Investec Agreement") requires the Company to make payments if
      excess cash is available during the 18 month grace period up to a maximum of R4,5 million on a quarterly basis;
-     five-year senior secured loan facility of R50,0 million (the "Bullet Facility") repayable by way of a bullet repayment
      at the end of the facility life. The Bullet Facility accrues interest at JIBAR plus 4% with the first interest payment
      due in December 2015 and thereafter the Company will make quarterly repayments of interest only; and
-     five-year senior secured revolving credit facility of R30,0 million repayable on the final maturity date being
      July 3, 2019. Interest accrues at prime plus 0.5%, payable monthly.

As of December 31, 2014, R162,2 million (PY2014: R156,0 million) had been drawn pursuant to the loan facilities. The
Group was fully drawn on the term loan, bullet and revolving credit facility for the financial year ended
December 31, 2014. For the financial year ended February 28, 2014, the Group was fully drawn on the term loan facility
and had R10,0 million available for drawdown on the revolving credit facility.

The Amended Investec Agreement provides for certain covenants to be maintained, however, as part of the
restructuring, BC Dundee is only required to report covenants to Investec commencing December 2015.

During the prior financial year, the Investec loan consisted of two facilities, a revolving loan facility of up to R30,0 million,
and a term loan facility of R200,0 million. The revolving loan facility bore interest at prime plus 0.5%, payable monthly.
The term loan facility bore interest at JIBAR plus 4%, repayable in quarterly principal payments of R10,5 million plus
interest with a payment holiday for the quarter ended February 28, 2014.

The movement in the Investec borrowings is as follows:

                                                              December 31, 2014   
Opening balance                                                     155 997 480   
Interest accrued                                                      1 124 453   
Net repayment of working capital facility                             5 251 023   
Balance after restructuring of investec facility                    162 372 956   
Warrants issued                                                    (22 987 796)   
Accretion of warrant asset                                            1 101 202   
Restructuring fee capitalized to loan facility                        2 280 000   
Restructuring costs                                                 (2 733 605)   
Accretion expense                                                       246 721   
Interest accrued                                                      2 148 750   
Net drawdown from working capital facility                            5 786 048   
Repayments                                                         (10 166 374)   
Closing balance                                                     138 047 902   

The restructured Investec facility is repayable as follows:              
         
                                                              December 31, 2014   
12 months                                                             6 000 000   
13-24 months                                                         24 000 000   
25-36 months                                                         24 000 000   
37-48 months                                                         24 000 000   
49-60 months                                                         24 000 000   
Greater than 60 months                                               60 228 930   
Total                                                               162 228 930   


In connection with the July 3, 2014 restructuring, Investec subscribed for 34 817 237 warrants in the Company with a
strike price of C$0.1446, the proceeds of which, if exercised, will be applied against settlement of the Bullet Facility. RCF
has the right to acquire the warrants from Investec at agreed pricing until July 3, 2019.

The Bullet Facility and the warrants have been treated as a compound financial instrument, as the Bullet Facility could
effectively be settled through the issuance of the Company's Common Shares. Furthermore, an embedded derivative
exists due to the warrants being denominated in Canadian Dollars and the functional currency of the Company being
Rands. The Bullet Facility has been recognized in two parts, a component liability and a warrant liability. The component
liability will be accreted to its face value of R40,5 million using the effective interest rate method at approximately
34.8%.

The initial carrying value of the warrant liability was obtained using the Black-Scholes option pricing model and the
following assumptions: expected volatility of 100.0%, life of 5.0 years, risk-free interest rate of 1.71% and an expected
dividend yield of 0%.

The fair value of the warrant liability at December 31, 2014 was obtained using the Black-Scholes option pricing model
and the following assumptions: expected volatility of 61.8%, life of 4.5 years, risk-free interest rate of 1.3% and an
expected dividend yield of 0%.

The movement in the warrant liability is as follows:

                                                              December 31, 2014   
Warrant option liability                                             22 987 796   
Fair value adjustment                                              (13 962 287)   
Foreign exchange differences                                          (206 975)   
Closing balance                                                       8 818 534   

The loan from Investec is secured as follows:

Cession in securitatem debiti agreement entered into between BC Corp and Investec in respect of BC Corp's rights, title,
claims and interests in and to the relevant assets which include: all the shares, securities and other ownership interests
in BC Dundee and BC together with all its debt claims against BC Dundee, BC and Zinoju; and BC Corp's bank accounts
held in South Africa together with all rights to cash balances standing to the credit of those bank accounts.

Cession in securitatem debiti agreement entered into between BC Dundee and Investec in respect of BC Dundee's rights,
title, claims and interests in and to the relevant assets which include: all insurances and all the proceeds receivable
under those insurances; trade receivables; claims of BC Dundee under the mining contract with Zinoju; BC Dundee's
share in and claims against Zinoju and all the bank accounts of BC Dundee and all rights to cash balances standing to the
credit of those bank accounts.

A first-ranking covering mortgage bond over each of the immovable properties (land and buildings) of which BC Dundee
is the registered owner. A first-ranking special notarial bond over specified movable property of BC Dundee and a
second ranking special notarial bond over the assets purchased using the funds received from RCF (note 22). A first and
second ranking general notarial bond over all of BC Dundee's movable assets.

22      RCF LOAN FACILITIES

RCF Original Convertible Loan

On September 4, 2013, the Company closed the secured US$6,0 million (approximately R61,0 million) RCF Original
Convertible Loan. The RCF Original Convertible Loan had an original maturity date of June 30, 2016. The principal on the
RCF Original Convertible Loan was convertible into Common Shares at a price of C$0.36 per share.

The issuance of Common Shares to RCF upon conversion of the loan, interest payments and for the establishment fee
was subject to shareholder approval which was received at the annual and special meeting that was held on
September 11, 2013. As a result, RCF received a 3% establishment fee payable in cash or Common Shares. Following
shareholder approval, 517 450 Common Shares at a price of C$0.36 per share were issued to satisfy the establishment
fee (note 19).

Prior to receipt of shareholder approval, the loan bore interest at a rate of 10% per annum, payable on each calendar
quarter in cash or Common Shares at a price per share equal to the 20-day VWAP as at the date the payment was due.
Upon receipt of shareholder approval on September 11, 2013, the interest rate decreased to 8% per annum.

The RCF Original Convertible Loan was secured by a cession of the shares of BC Dundee, a special notarial bond over the
anthracite stockpile as at July 31, 2013 and a cession of a specified bank account into which all proceeds from the sale of
such anthracite stockpile were transferred.

In addition, BC Dundee provided a guarantee to RCF guaranteeing the payment and performance of all liabilities and
obligations of the Company to RCF under the RCF Original Convertible Loan. The guarantee was limited to restrictions
imposed by the South African Reserve Bank, if any.

RCF Bridge Loan

On February 4, 2014, the Company entered into an agreement with RCF for a secured US$25,0 million convertible loan
facility ("RCF US$25 million Facility") which comprised the RCF Bridge Loan, a convertible loan of up to US$15,0 million
and a refinancing of the RCF Original Convertible Loan.

On February 5, 2014, the Company closed the secured US$4,0 million (approximately R42,9 million) RCF Bridge Loan,
being the first tranche of the RCF US$25 million Facility. The RCF Bridge Loan bore interest at 15% per annum, payable in
arrears at the end of each month, in cash or Common Shares at a price per share equal to the 20-day VWAP as at the
date the payment was due. The RCF Bridge Loan would roll up into the US$25 million Facility upon shareholder approval
with the same terms and conditions as the RCF US$25 million Facility.

The Company made an application to the TSX to rely on an exemption from the requirement to obtain shareholder
approval as requested in respect of the terms of the RCF Bridge Loan on the basis of financial hardship, which was
granted by the TSX.

As a result of the RCF Bridge Loan, RCF received a 5% establishment fee which was issued in Common Shares at a price
of C$0.1446 per share (note 19).

The RCF Bridge Loan was secured by the security provided by the Company for the RCF Original Convertible Loan (other
than the special notarial bond over the anthracite stock pile).

RCF Convertible Loan

On July 3, 2014, after receiving shareholder approval at the special and annual general meeting held on
June 27, 2014, BC Corp closed the final tranche of the RCF US$25 million Facility of US$15,0 million. Furthermore, the
RCF Bridge Loan, the RCF Original Convertible Loan and the final tranche were rolled up into one facility ("RCF
Convertible Loan"), which is convertible at a price of C$0.1446 per Common Share and matures on June 30, 2019.

There are two types of advances per the Amended RCF Agreement in respect of the advance of the third tranche of
US$15,0 million:

-      scheduled advances of funds by RCF to BC Corp of approximately US$4,8 million (approximately R48,5 million);
       and
-      equipment advances of approximately US$10,2 million (approximately R103,0 million), whereby funds will
       be advanced by RCF directly to equipment suppliers on behalf of the Company.

In terms of IAS 39, Financial Instruments: Recognition and Measurement, the roll up of the loan was treated as a
modification as the terms of the RCF Convertible Loan were not, by definition, substantially different from those of the
RCF Bridge Loan and RCF Original Convertible Loan facilities.

As of December 31, 2014, the Company had drawn US$22,8 million (R265,0 million) (PY2014: US$10,0 million
(R64,4 million)) pursuant to the terms of the RCF Convertible Loan. As of December 31, 2014, the Group had
US$2,2 million (approximately R22,0 million) available for drawdown from the RCF US$25 million Facility, which was
drawn in full subsequent to December 31, 2014.

The movement in the RCF Convertible Loan facility is as follows:

                                                           December 31, 2014   February 28, 2014   
Opening balance                                                   91 610 592                   -   
Adjustment due to modification of debt                             8 554 152                   -   
Loan proceeds                                                    139 637 969         103 945 495   
Conversion option liability                                    (107 724 257)        (10 878 308)   
Loan issue costs                                                (14 788 621)         (6 636 345)   
Accretion expense                                                  6 303 763           2 421 145   
Effect of foreign currency exchange difference                     8 948 655           2 758 604   
Total loan                                                       132 542 252          91 610 592   
Current portion of RCF loan facilities                                     -        (40 723 113)   
Long-term portion of RCF loan facilities                         132 542 252          50 887 479   

On July 4, 2014, the Company received the first scheduled advance of US$4,4 million (approximately R47,0 million) from
RCF of which R24,3 million was deposited into the Investec revolving credit facility and R9,8 million was paid into the
Bullet Facility, as per the Amended Investec Agreement (note 21). An additional US$0,8 million (approximately
R8,6 million) was received during the financial year from RCF as a scheduled advance.

During the financial year ended December 31, 2014, a total of US$7,6 million (approximately R83,9 million) was
advanced by RCF directly to equipment suppliers, on behalf of BC Dundee, for the acquisition of assets and equipment as
specified in the Amended RCF Agreement.

Due to the two incidents at the mines in September 2014, RCF agreed that the remaining funds under the facility be
used to purchase the remaining assets as per the Amended RCF agreement and for working capital purposes.

The Company issued 5 531 120 Common Shares to RCF at a price of C$0.1446 per Common Share, to settle the 5%
establishment fee on the final tranche of the facility (note 19).

Conversion option liability

The RCF Convertible Loan has been recognized in two parts, a component liability and a conversion option liability. An
embedded derivative exists due to the convertible loan facility being denominated in US Dollars, the conversion feature
being exercisable in Canadian Dollars and the functional currency being Rands. The component liability will be accreted
to its face value of US$22,8 million (approximately R265,0 million) using the effective interest rate method at
approximately 34.2%. The movement in the conversion option liability is as follows:

                                                           December 31, 2014   February 28, 2014   
Opening balance                                                    7 828 422                   -   
Reversal of option liability due to modification of debt         (7 828 422)                   -   
Conversion option liability                                      107 724 257          10 878 308   
Loan issue costs relating to conversion option                             -           (959 445)   
Fair value adjustment                                           (53 536 779)         (2 129 444)   
Foreign currency translation adjustment                             (98 923)              39 003   
Closing balance                                                   54 088 555           7 828 422   

The initial carrying value of the conversion option liability at each advance was obtained using the Black-Scholes option
pricing model and the following assumptions: expected volatility between 60% and 107%, life of between 4.6-5.0 years,
risk-free interest rate of 1.3%-1.5% and expected dividend yield of 0%.

The fair value of the conversion option liability at December 31, 2014 was obtained using the Black-Scholes option
pricing model and the following assumptions: expected volatility of 69%, life of 4.5 years, risk-free interest rate of 1.3%
and expected dividend yield of 0%.

Security

In terms of the Amended RCF Agreement, the Company was released from the security previously provided to RCF which
included a special notarial bond over the anthracite stockpile at July 31, 2013, the cession of a specified bank account
into which all the proceeds from the sale of such anthracite stockpile were transferred and security over BC Dundee's
shares.

Effective July 3, 2014 and in terms of the Amended RCF Agreement, RCF has taken a first ranking special notarial bond
from the Company over the new equipment as specified in the Amended RCF Agreement and acquired using the
proceeds of the RCF Convertible Loan. Furthermore, RCF has taken second ranking security over BC Dundee's shares and
all other moveable and immovable assets of the Company.

23      ASSET RETIREMENT OBLIGATION

                                                           December 31, 2014   February 28, 2014   
Opening balance                                                   34 593 321          32 601 706   
Change in estimate                                              (13 170 925)           2 361 339   
- Included in property, plant and equipment                     (12 710 950)             860 072   
- Reversal of provision                                            (961 346)                   -   
- Unwinding of discount                                              501 371           1 501 267   
Foreign currency translation adjustment                                    -           (369 724)   
Closing balance                                                   21 422 396          34 593 321   
Current portion                                                  (2 664 209)         (2 664 209)   
Non-current portion                                               18 758 187          31 929 112   

South African mining companies are required by law to undertake rehabilitation works as part of their ongoing
operations. These environmental rehabilitation costs are funded by contributions into long-term investments held in the
Trust (note 12). A provision is recognized based on the net present value of the estimated cost of restoring the
environmental disturbance that has occurred at the statement of financial position date and is expected to be paid out
within 20-25 years. The expected timing of the cash outflows, in respect of the provision, is on the closure of the various
mining operations. However, certain current rehabilitation costs are charged to this provision as and when incurred.

The provision is calculated using the following rates:

                                                           December 31, 2014   February 28, 2014   
Discount rate (%)                                                       8.50                6.05   
Inflation rate (%)                                                      5.60                5.60   

24   TRADE AND OTHER PAYABLES

                                                           December 31, 2014   February 28, 2014   
Trade payables                                                    75 323 420          93 239 580   
Audit fees                                                           779 325           3 866 648   
Receiver of Revenue - VAT                                          2 088 786           2 868 734   
Income received in advance                                                 -             502 625   
Deferred revenue                                                  16 876 846          29 859 039   
Sundry payables and accruals                                      42 643 349          25 603 737   
Short-term instalment sale agreement                              18 643 930                   -   
Leave pay provision                                               14 151 229          14 221 043   
Total                                                            170 506 885         170 161 406   

The fair value of trade and other payables approximates their carrying amount, as the impact of discounting is not
considered significant.

During the current financial year, the Company entered into a twelve month instalment sale agreement with a supplier
for the purchase of a continuous miner. A deposit of R3,4 million was paid in July 2014 with a further R14,5 million paid
in December 2014 (using funds received from RCF), and equal monthly instalments of R1,8 million payable for the next
twelve months, beginning December 2014. Interest will be charged at the South African prime rate plus 2.25%.

On December 22, 2014, the Company announced a restructuring of the BC Dundee operations in order to improve
operating efficiencies and return to profitability, thereby ensuring that the Company remains sustainable into the future.
In terms of the proposed restructuring, a consultation process commenced in January 2015 in South Africa with
organized labour and relevant stakeholders, as required in terms of section 189A of the South African Labour Relations
Act ("LRA"). Included in sundry payables and accruals as of December 31, 2014 is the Company's provision of R8,4 million
(R13,7 million including leave pay) which is the Company's best estimate of the labour retrenchment costs. The provision
was based on the anticipated number of staff to be retrenched and an estimated redundancy compensation package in
terms of South African law. The provision is expected to be fully utilized in the first half of 2015.

In a prior financial year, Zinoju entered into a contract with a customer which expired on December 31, 2013, with an
outstanding liability to the customer of US$2,8 million (approximately R31,1 million), as a result of an invoicing
mismatch. A new contract was entered into with the customer on February 1, 2014, the terms of which allowed for the
settlement of the outstanding liability. However, the contract included a clause that in the event of default, the
customer is entitled to payment of the liability reduced in proportion over the period of the contract. The liability was
therefore reclassified as deferred revenue as, in substance, the contract is an off-take agreement with an upfront
payment.

The carrying amounts of the Group's trade and other payables are denominated in the following currencies:

                                                           December 31, 2014   February 28, 2014   
CAD                                                                3 241 320           9 513 088   
USD                                                               19 669 960          42 640 366   
ZAR                                                              147 569 877         117 982 303   
GBP                                                                   25 728              25 649   
Total                                                            170 506 885         170 161 406   

25     SHARES IN ESCROW

On July 20, 2010, the shareholders of the Company were issued 2 700 000 special performance warrants (the "Special
Performance Warrants"). Each Special Performance Warrant was automatically exercised into one Common share of the
Company (collectively, the "Performance Shares") for no additional consideration immediately prior to the completion
of the Nyah Resources Inc. acquisition, provided that such Performance Shares would be deposited in escrow with an
escrow agent (the "Escrowed Shares"), to be released as follows:

-      50% of the Escrowed Shares (the "First Tranche Escrowed Shares") to be released once the Company achieved
       US$22,0 million in EBITDA from the BC Dundee Properties over a twelve consecutive month period by
       July 20, 2013;
-      The remaining Escrowed Shares would be released if the Company achieved US$35,0 million in EBITDA from the
       BC Dundee Properties over a twelve consecutive month period within a three year period following the release
       of the First Tranche Escrowed Shares. For further clarity, EBITDA generated from the BC Dundee Properties
       excluded any gains or losses generated by the combined company from the disposal of the BC Dundee
       Properties.
-      In the event of not achieving the above EBITDA targets from the BC Dundee Properties, the Escrowed Shares
       would be cancelled.

During the year ended February 29, 2012, the US$22,0 million in EBITDA from the BC Dundee Properties was achieved
and the first tranche Escrowed Shares were released. On November 4, 2014, the remaining Escrowed Shares (1 350 000
shares) were cancelled, as BC Dundee had not achieved the target EBITDA of US$35,0 million.

26     FINANCIAL INSTRUMENTS BY CATEGORY

The Company's financial assets and financial liabilities as at December 31, 2014 and February 28, 2014 were as follows:

Financial instruments                      Loans and       Fair value     Liabilities at            Other           Total   
                                         receivables   through profit         fair value   liabilities at                   
                                                              or loss     through profit   amortized cost                   
                                                                                 or loss                                    
December 31, 2014                                                                                                           
Trade and other receivables (excluding                                                                                      
non-financial assets)                     78 553 015                -                  -                -      78 553 015   
Investments in financial assets                    -       29 134 182                  -                -      29 134 182   
Cash (excluding restricted cash)          12 120 081                -                  -                -      12 120 081   
Non-interest bearing receivables           1 587 765                -                  -                -       1 587 765   
Investec borrowings                                -                -        (8 818 534)    (138 047 902)   (146 866 436)   
RCF loan facilities                                -                -       (54 088 555)    (132 542 252)   (186 630 808)   
Trade and other payables (excluding                                                                                         
non-financial liabilities)                         -                -                  -    (151 541 252)   (151 541 252) 
  
Financial instruments                      Loans and       Fair value     Liabilities at     At amortized           Total   
                                         receivables   through profit         fair value             cost                   
                                                              or loss     through profit                                    
                                                                                 or loss                                    
February 28, 2014                                                                                                           
Trade and other receivables (excluding                                                                                      
non-financial assets)                     62 109 385                -                  -                -      62 109 385   
Investments in financial assets                    -       23 586 748                  -                -      23 586 748   
Cash (excluding restricted cash)          14 582 999                -                  -                -      14 582 999   
Interest bearing receivables              29 140 388                -                  -                -      29 140 388   
Non-interest bearing receivables           1 504 434                -                  -                -       1 504 434   
Investec borrowings                                -                -                  -    (155 997 480)   (155 997 480)   
RCF loan facilities                                -                -        (7 828 422)     (91 610 592)    (99 439 014)   
Trade and other payables (excluding                                                                                         
non-financial liabilities)                         -                -                  -    (122 709 966)   (122 709 966)   

27   CASH GENERATED FROM OPERATIONS

                                                                                    December 31, 2014   February 28, 2014   
Loss before income tax                                                                  (163 046 392)       (297 461 181)   
Adjusted for:                                                                                                               
Depreciation and amortization                                                              75 463 018         100 609 395   
Impairment of escrow funds                                                                          -          19 427 033   
Impairment of property, plant and equipment and goodwill                                                                    
and other intangible assets                                                                90 882 250         152 007 765   
Unrealized foreign exchange loss/(gain)-net                                                 6 962 451          16 636 477   
Impairment of trade receivables                                                           (1 687 032)           1 804 291   
Net profit on disposal of property, plant and equipment                                     (238 843)         (6 558 810)   
Fair value adjustment on investments in financial assets                                  (1 696 080)         (3 338 120)   
Fair value adjustment on conversion option and warrant liability                         (66 979 331)         (2 129 444)   
Write-down of inventory to net realizable value                                            23 170 501           9 892 478   
Reversal of asset retirement obligation provision                                           (961 346)                   -   
Stock-based compensation                                                                      302 734           3 316 760   
Finance income - cash                                                                     (1 073 085)         (1 084 015)   
Finance income - non-cash                                                                           -         (2 152 075)   
Finance cost ? cash                                                                         8 787 101          18 413 418   
Finance cost ? non-cash                                                                    28 638 224           5 931 605   
Net changes in working capital:                                                          (14 142 056)         (9 961 439)   
Cash (utilized in)/generated from operations                                             (15 617 886)           5 354 138   

28     TRANSACTION WITH RIVERSDALE MINING LIMITED

Proposed acquisition of Riversdale Holdings Proprietary Limited

In September 2012, the Company and Rio Tinto PLC ("Rio Tinto") announced that they had entered into a definitive
agreement whereby BC Corp was expected to acquire 100% ownership of the shares and shareholder claims of
Riversdale Mining Limited ("RML") in Riversdale Holdings Proprietary Limited ("RHPL") ("the Riversdale Acquisition"), as
a result of which, the Company would have acquired RHPL's 74% interest in the Zululand Anthracite Colliery ("ZAC"), a
current producing anthracite mine, and RHPL's 74% interest in the Riversdale Anthracite Colliery ("RAC"), an
undeveloped anthracite resource. A deposit, totaling R45,5 million was paid into an escrow account to be applied
against the purchase consideration for the Riversdale Acquisition ("the Escrow Funds"). See below under "Loan facility"
regarding the funding and guarantees provided for the Riversdale Acquisition.

Cancellation of transaction

In February 2013, the Company notified RML of the cancellation of the Riversdale Acquisition, as a result of a material
deterioration in the performance of ZAC, which, in the opinion of the Company, constituted a breach of certain
provisions of the agreement. Following the cancellation of the Riversdale Acquisition, two disputes were declared with
the Company seeking the return of the Escrow Funds and RML seeking damages in the amount of R299,5 million
resulting from the cancellation of the Riversdale Acquisition.

Loan facility

Investec agreed to underwrite the funding for the Riversdale Acquisition, by way of the provision of guarantees of
R394,5 million to RML, and ultimately by providing debt funding for the same amount, for the payment of the purchase
consideration. The debt was structured as a loan facility to BC Dundee which was then advanced to BC, which would
then purchase the shares and claims in RHPL.

The guarantee expired in May 2013. At December 31, 2014 and February 28, 2014, no liability existed to Investec in
respect of the transaction guarantees, other than in respect of a front-end fee of 4% of the guarantee facility amount.
The fee of R18,0 million was paid in May 2013.

Settlement

In March 2014, the Company reached a settlement agreement with RML in respect of the disputes between the parties.
The claim by the Company against RML for the return of the Escrow Funds, and the claim by RML against the Company
for damages in the amount of R299,5 million were settled by way of the Escrow Funds (including interest) being shared
between the parties as to R19,4 million to RML and the balance of R29,3 million to the Company.

Pursuant to the terms of the settlement agreement, neither party shall have any further claim, right, liability and/or duty
of any kind towards the other party in respect of either claim.

29      RELATED PARTIES

During the period, the Company entered into the following transactions in the ordinary course of business with related
parties:

                                                                              December 31, 2014   February 28, 2014   
Payments for services rendered                                                                                        
2227929 Ontario Inc.(1)                                                                       -           5 728 540   
Forbes & Manhattan Inc.(2)                                                                    -           2 744 704   
RCF(3)                                                                                2 966 708           2 394 772   
Total                                                                                 2 966 708          10 868 016  
 
The following balances were outstanding at the end of the reporting period:   
                                        
                                                                              December 31, 2014   February 28, 2014   
Related party payables                                                                                                
2227929 Ontario Inc.(1)                                                                       -           2 357 756   
Forbes & Manhattan Inc.(2)                                                                    -              58 424   
RCF(3)                                                                                2 758 777           2 028 774   
Total                                                                                 2 758 777           4 444 954   

These amounts are unsecured, non-interest bearing with no fixed terms of repayment.

(1) The Company historically shared office space in Toronto, Canada with other companies which may have had officers or
directors in common with BC Corp. The costs associated with this space, certain consulting, professional and general and
administration services are administered by 2227929 Ontario Inc. These common directors and officers are no longer part of
the Group and 2227929 Ontario Inc is not considered to be a related party, as defined, for the financial year ended
December 31, 2014.

(2) Mr. Stan Bharti, a former director of BC Corp, is the Executive Chairman of Forbes & Manhattan Inc. The Company previously
had consulting agreements with Mr. Stan Bharti and Forbes & Manhattan Inc. which were terminated on May 1, 2013 and
November 7, 2013 respectively. Forbes & Manhattan Inc. is no longer considered to be a related party, as defined, for the
financial year ended December 31, 2014.

(3) RCF is a related party to the Company as a result of owning more than 10% of the issued and outstanding Common Shares
and having a representative, Mr. David Thomas on the Board of Directors of the Company. As set out in the Amended RCF
Agreement, RCF has invoiced the Company for costs incurred relating to the facilities, which are disclosed above. In addition to
these costs, the Company settled interest on the RCF Convertible Loan in Common Shares during the financial year ended
December 31, 2014, which amounted to R17,2 million (PY2014: R2,9 million) (note 19).

Compensation of key management personnel

In accordance with IAS 24 - Related-Party Disclosures, key management personnel are those persons having authority and
responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors
(executive and non-executive) of the Company.

The remuneration of directors and other members of key management personnel (officers) during the period were as follows:

                                                                              December 31, 2014   February 28, 2014   
Short-term benefits                                                                  13 007 957          13 524 250   
Share-based payments                                                                    302 734           3 207 401   
Total                                                                                13 310 691          16 731 651   


During the current financial year, 375 000 share options were granted to directors of the Company, vesting over a two-year
vesting period, a portion vesting immediately. The fair value of these share options was estimated to be R0,3 million using the
Black-Scholes option pricing model.

As of December 31, 2014, C$100 000 (R1,0 million) worth of restricted stock units ("RSUs") were granted to a director but not
issued under the plan. These amounts were accrued as of December 31, 2014 and February 28, 2014. Amounts owing to
directors and other members of key management personnel were R1,5 million as of December 31, 2014 as compared to R2,7
million at February 28, 2014.

30    COMMITMENTS AND CONTINGENCIES

Management Contracts

Certain management contracts require that payments of approximately R12,5 million be made upon the occurrence of a
change of control, other than a change of control attributable to RCF. As no triggering event has taken place, no
provision has been recognised as of December 31, 2014.

Capital Commitments

Capital expenditures contracted for at the statement of financial position date but not recognized in the consolidated
financial statements are as follows:

                                                                          December 31, 2014       February 28, 2014
Property, plant and equipment                                                    27 378 909               8 271 945

Included in the R8,3 million disclosed in PY2014 was a commitment to purchase a mining right from Ikwezi Mining
Proprietary Limited ("Ikwezi"). The agreement between BC Dundee, Zinoju and Ikwezi, lapsed on June 30, 2014 as a
result of not receiving regulatory consent from the Minister of Mineral Resources within the expected timelines (in
terms of section 102 of the Mineral and Petroleum Resources Development Act 28 of 2004 ("MPRDA")) and is no longer
considered a commitment of the Group. Included in the R27,4 million disclosed as of December 31, 2014 are
commitments relating to the purchase of machinery and equipment which will be funded by equipment advances from
RCF.

Environmental Contingency

The Company's mining and exploration activities are subject to various laws and regulations governing the environment.
These laws and regulations are continually changing and generally becoming more restrictive. The Company believes its
operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to
make in the future, expenditures to continue to comply with such laws and regulations.

Outstanding Legal Proceedings

On August 29, 2014 the Company reached a settlement agreement with Sasfin Bank Limited ("Sasfin") with regards to
Sasfin's claim for advisory fees in relation to the Riversdale Acquisition agreement. The settlement agreement requires
the Company to pay R2,1 million in two instalments of which the first instalment of R1,0 million was paid in September
2014 and the second of R1,1 million is payable in September 2015. This amount has been provided for as of December
31, 2014. Pursuant to the terms of the settlement agreement, such payment is in full and final settlement of all claims
which either party may have against each other.

An appeal was lodged in terms of section 96 of the MPRDA, by the Avemore Trust, challenging the Department of
Mineral Resources ("DMR") in relation to the grant of Mining Right 174 to Zinoju. Zinoju lodged its replying submission
to the DMR. On September 23, 2014 the DMR informed Zinoju of the decision taken by the Minister to grant the
necessary approvals which rendered the appeal against Zinoju unsuccessful.

31     CHANGE IN DIRECTORS AND OFFICERS

On June 12, 2014, the Company announced the appointment of Mr. David Thomas to the Board of Directors. The
appointment of Mr. Thomas follows the resignation of Mr. Thomas Quinn Roussel who stepped down as a director of
the Company.

Mr. Neil Said resigned from his position as Corporate Secretary following the closing of the funding transactions with RCF
on July 3, 2014 (refer to note 22) and the Company appointed Ms. Lorraine Harrison to the position of Corporate
Secretary on the same day.

On July 18, 2014, the Company announced the resignation of Mr. Bernard Wilson from the Board of Directors with
effect from July 7, 2014.

32     SUBSEQUENT EVENTS

Issuance of Share Capital

Subsequent to December 31, 2014, the Company issued additional shares to RCF in settlement of interest owing on the
RCF Convertible Loan for the periods ended December 31, 2014, January 31, 2015 and February 28, 2015. An additional
2 722 704, 3 752 803 and 3 972 281 Common Shares were issued at prices of C$0.0962, C$0.0812 and C$0.0752,
respectively.

Bridge Loan from RCF

On January 30, 2015, the Company signed a term sheet (the "Term Sheet") to secure an additional US$4,0 million loan
facility from RCF. Under the terms set out in the Term Sheet, the US$4,0 million will be advanced as a bridge loan (the
"2015 Bridge Loan") and, subject to receiving regulatory and shareholder approvals as required, will roll over into the
RCF Convertible Loan, under the same terms and conditions except for the proposed amendments to the interest rate
and conversion price on the full US$29,0 million (the "2015 RCF Convertible Loan").

The 2015 Bridge Loan will be used for working capital and to implement the employment restructuring plan at BC
Dundee (note 24). Funds from the 2015 Bridge Loan will be available upon satisfaction of the conditions precedent set
out in the Term Sheet and will be drawn on an as needed basis. The 2015 Bridge Loan will bear interest at a rate of 15%
per annum, payable on the maturity date which is the earlier of the date on which all approvals are received or
June 30, 2015. Subject to receipt of the approvals, interest will be payable in Common Shares at a price per share equal
to the 20-day VWAP as at the date the payment is due. No establishment fees will be incurred on the 2015 Bridge Loan.
If the approvals are not received by June 30, 2015, the 2015 Bridge Loan and all accrued but unpaid interest due to RCF
will be immediately due and payable in cash.

Convertible Loan

The 2015 RCF Convertible Loan will have the same terms and conditions as the RCF Convertible Loan, except for the
following changes to the interest rate, conversion price and the increased amount available under the loan. The interest
rate on the 2015 RCF Convertible Loan will be increased to 15% per annum and the conversion price will be decreased to
C$0.0469, a 25% discount to the 5-day VWAP as at January 30, 2015.

Restructuring of mining operations

On March 11, 2015, the Company commenced with implementation of the restructuring of its operational and cost
structures at BC Dundee, as announced on December 22, 2014. The consultation process in South Africa with organised
labour and relevant stakeholders was completed as required in terms of section 189A of the LRA, and as a consequence,
the Company commenced with the retrenchments of mine employees. As a result, the Company's workforce will be
reduced by approximately 25% once implementation of this process has been completed.

Legal Matter

On March 20, 2015, the Association of Mineworkers and Construction Union ("AMCU") brought an application against
BC Dundee and Zinoju in the Labour Court of South Africa pertaining to the Section 189A restructuring process in terms
of the LRA which the Company implemented, as announced on March 11, 2015. The matter has been set down to be
heard on an urgent basis on March 31, 2015, and BC Dundee and Zinoju have engaged with legal representatives and
will oppose the application.

Other Matters

Except for the matters discussed above, no other matters which management believes are material to the financial
affairs of the Company have occurred between the statement of financial position date and the date of approval of the
financial statements.

March 26, 2015

Sponsor
Questco (Pty) Ltd

Date: 27/03/2015 05:15:00 Supplied by www.sharenet.co.za                     
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