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Buffalo Coal Corp - Consolidated Financial Statements For The 12 Months Ended 31 Dec 2015 And 10 Months Ended Dec 2014

Release Date: 30/03/2016 16:00:00      Code(s): BUC     
BUFFALO COAL CORP.
(previously Forbes & Manhattan 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 twelve months ended December 31, 2015 and ten months ended December 31, 2014
(Presented in South African Rands)

INDEPENDENT AUDITOR?S REPORT

McGovern, Hurley, Cunningham, LLP
Chartered Accountants
2005 Sheppard Avenue East, Suite 300
Toronto, Ontario
M2J 5B4, Canada
Phone    416-496-1234
Fax      416-496-0125
Web      www.mhc-ca.com

To the Shareholders of Buffalo Coal Corp.:

We have audited the accompanying consolidated financial statements of Buffalo Coal Corp. and its subsidiaries, which comprise
the consolidated statements of financial position as at December 31, 2015 and 2014, and the consolidated statements of profit or loss 
and other comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the
twelve-month period ended December 31, 2015 and the ten-month period ended December 31, 2014, and a summary 
of significant accounting policies and other explanatory information.

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards and for such internal control as management determines is necessary to enable the preparation
of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor?s Responsibility 

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance
with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the consolid ated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated 
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose o f expressing an opinion on the effectiveness of the entity's internal control. 
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Buffalo Coal Corp. and
its subsidiaries as at December 31, 2015 and 2014, and their financial performance and cash flows for the twelve - month period ended December 31, 2015 
and the ten-month period ended December 31, 2014 in accordance with International Financial Reporting Standards.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 2.1 in the consolidated financial statements which indicates that as at December 31, 2015, the 
Company has a shareholders? deficiency and a working capital deficiency, and incurred a loss for the twelve-month period ended December 31, 2015. 
The Company expects to breach certain covenants with respect to its borrowings. The Company has experienced operational challenges, and has had a significant 
need for equity capital and financing for operations and working capital. These conditions along with other matters set forth in Note 2.1 indicate the existence
of material uncertainties that cast significant doubt about the Company?s ability to continue as a going concern.

McGOVERN, HURLEY, CUNNINGHAM, LLP
Chartered Accountants
Licensed Public Accountants
TORONTO, Canada
March 24, 2016

Consolidated Statements of Financial Position
(Presented in South African Rands)
                                                              December 31,     December 31,      December 31,
                                                                      2015             2014              2015
                                                                                                     (Note 2)
                                                  Notes                  R                R                C$
Assets
Non-current assets
Property, plant and equipment                         9        340 649 540      561 403 916        30 401 023
Investment in financial assets                       11         35 674 589       29 134 182         3 183 753
Deferred tax asset                                   12          1 743 492       15 495 588           155 597
Other receivables                                    13          4 099 242       14 238 959           365 834
Long-term restricted cash                            16         11 200 000       11 200 000           999 536
Total non-current assets                                       393 366 863      631 472 645        35 105 743
Current assets
Trade and other receivables                          13         75 581 681       95 474 959         6 745 234
Inventories                                          14         42 225 872       27 034 967         3 768 418
Non-interest bearing receivables                     15          1 697 948        1 587 765           151 532
Taxation receivable                                                 51 516        2 336 605             4 598
Cash and cash equivalents                            17         20 365 446       12 120 081         1 817 500
Non-current assets held for sale                      9         25 000 000              -           2 231 107
Total current assets                                           164 922 463      138 554 377        14 718 389
Total assets                                                   558 289 326      770 027 022        49 824 132
Equity and liabilities
Capital and reserves
Share capital                                        18      1 038 096 502      937 966 442        92 644 174
Currency translation reserve                                 (219 945 085)    (219 945 085)      (19 628 841)
Reserves                                             19         16 726 895       19 599 807         1 492 780
Accumulated retained loss                                  (1 055 512 401)    (497 359 808)      (94 198 444)
Equity (deficiency) attributable to owners of the
company                                                      (220 634 089)      240 261 356      (19 690 331)
Non-controlling interest                                         4 339 142        4 339 142           387 244
Total equity (deficiency)                                    (216 294 947)      244 600 498      (19 303 087)
Non-current liabilities
Borrowings                                           20        143 535 994      132 047 902        12 809 766
Warrant liability                                    20          2 144 609        8 818 534           191 394
RCF loan facilities                                  21        299 753 845      132 542 252        26 751 316
Conversion option liability                          21        124 378 349       54 088 555        11 100 056
Asset retirement obligation                          22         14 992 013       18 758 187         1 337 951
Total non-current liabilities                                  584 804 810      346 255 430        52 190 483
Current liabilities
Trade and other payables                             23        161 400 974      170 506 885        14 404 118
Current portion of borrowings                        20         25 714 284        6 000 000         2 294 853
Current portion of asset retirement obligation       22          2 664 205        2 664 209           237 765
Current liabilities                                            189 779 463      179 171 094        16 936 736
Total liabilities                                              774 584 273      525 426 524        69 127 219
Total equity (deficiency) and liabilities                      558 289 326      770 027 022        49 824 132

Commitments and contingencies                1, 2.1, 29

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)
                                                                       12 months          10 months          12 months
                                                                           ended              ended              ended
                                                                    December 31,       December 31,       December 31,
                                                     Notes                  2015               2014               2015
                                                                                                              (Note 2)
                                                                               R                  R                 C$
Revenue                                                              630 999 455        593 841 226         56 313 092
Cost of sales                                            5         (711 437 976)      (637 994 419)       (63 491 769)
Gross loss                                                          (80 438 521)       (44 153 193)        (7 178 677)
Other (expense)/income - net                             6         (307 895 390)       (22 558 050)       (27 477 902)
General and administration expenses                      5          (68 684 249)       (59 982 910)        (6 129 676)
Loss before the undernoted                                         (457 018 160)      (126 694 153)       (40 786 255)
Finance income                                           7               849 975          1 073 085             75 855
Finance expense                                          7          (90 300 915)       (37 425 325)        (8 058 840)
Loss before income tax                                             (546 469 100)      (163 046 393)       (48 769 240)
Income tax (expense)/benefit                             8          (15 355 554)         54 605 580        (1 370 395)
Loss and total comprehensive loss for the year                     (561 824 654)      (108 440 812)       (50 139 635)

Loss attributable to:
- Owners of the parent                                             (561 824 654)      (108 440 812)       (50 139 635)
- Non-controlling interest                                                     -                  -                  -
                                                                   (561 824 654)      (108 440 812)       (50 139 635)

Net loss per share - basic and diluted                                    (5.31)             (2.11)             (0.47)
Headline loss per share - basic and diluted                               (5.34)             (2.10)             (0.48)
Weighted average number of common shares outstanding:
- Basic                                                              105 825 767         51 408 750        105 825 767
- Diluted                                                            105 825 767         51 408 750        105 825 767

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                               
                                              No. of shares                                 Reserves                                    Currency                             Non-    Total equity
                                                     issued            Share          Option        BEE option      Accumulated      translation                      controlling
                                                                     capital         reserve           reserve    retained loss          reserve          Total          interest
                                    Notes                                  R               R                 R                R                R              R                 R               R
Balance at February 28, 2014                     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 March 1, 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                       18        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        19                 -                -    (10 574 992)                 -       10 574 992                -              -                 -               -
Cancellation of shares in escrow       24       (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
Shares issued in relation to RCF
Convertible Loan and Private
Placement to RCF                       18       219 007 338       97 800 475               -                 -                -                -     97 800 475                 -      97 800 475
Shares issued to management and
directors                              18         5 525 000        2 329 585               -                 -                -                -      2 329 585                 -       2 329 585
Stock-based compensation                                  -                -         799 149                 -                -                -        799 149                 -         799 149
Stock options expired/cancelled        19                 -                -     (3 672 061)                 -        3 672 061                -              -                 -               -
Net loss for the period                                   -                -               -                 -    (561 824 654)                -  (561 824 654)                 -   (561 824 654)
Balance at December 31, 2015                    280 729 049    1 038 096 502       7 653 184         9 073 711  (1 055 512 401)    (219 945 085)  (220 634 089)         4 339 142   (216 294 947)

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

Consolidated Statements of Cash Flow
(Presented in South African Rands)
                                                                        12 months        10 months        12 months
                                                                            ended            ended            ended
                                                          Notes      December 31,     December 31,     December 31,
                                                                             2015             2014             2015
                                                                                                           (Note 2)
                                                                                R                R               C$
Cash flows from operating activities
Cash utilized in operations                                  26      (51 483 895)     (15 617 886)      (4 594 643)
Interest received                                                         849 975        1 073 085           75 855
Interest paid                                                        (13 929 495)      (8 787 101)      (1 243 128)
Taxation recovered/(paid)                                                 681 627      (1 315 599)           60 832
Net cash utilized in operating activities                            (63 881 788)     (24 647 501)      (5 701 084)
Cash flows from investing activities
Investment in financial assets                                        (4 888 554)      (3 846 794)        (436 275)
Purchase of property, plant and equipment                            (55 981 105)    (138 210 966)      (4 995 993)
Proceeds from the disposal of property, plant and equipment             5 528 509        3 360 526          493 388
Movement in non-current other receivables                                       -     (10 331 276)                -
Settlement of cancelled Riversdale Acquisition                                  -       29 140 388                -
Movement in non-interest bearing receivables                            (110 183)         (83 331)          (9 834)
Movement in restricted cash                                                     -        6 190 532                -
Net cash utilized in investing activities                            (55 451 333)    (113 780 921)      (4 948 714)
Cash flows from financing activities
Proceeds from Private Placement                                        28 705 063                -        2 561 763
Proceeds from RCF Convertible Loan                                     74 395 051      139 637 969        6 639 333
Issuance costs related to the RCF Convertible Loan                      (134 252)      (3 280 665)         (11 981)
Drawdowns from the revolving credit facility                           41 632 006       11 037 071        3 715 418
Repayment of borrowings                                              (17 019 382)      (8 695 265)      (1 518 883)
Issuance costs related to restructuring of borrowings                           -      (2 733 605)                -
Net cash generated from financing activities                          127 578 486      135 965 504       11 385 650
Net increase/(decrease) in cash and cash equivalents                    8 245 365      (2 462 918)          735 852
Cash at the beginning of the period                                    12 120 081       14 582 999        1 081 648
Cash at the end of the period                                          20 365 446       12 120 081        1 817 500

Non-cash investing and financing transactions

Warrants issued relating to restructured borrowings                             -       22 987 796                -
Common shares issued in settlement of the establishment
fees relating to the RCF loan facility                                          -       15 946 835                -
Common shares issued in settlement of the interest owing
on and conversion of the RCF loan facilities and Private
Placement to RCF                                                       69 095 413        8 067 900        6 166 370
Common shares issued to management and directors                        2 329 585                -          207 902
Cancellation of shares in escrow                                                -     (34 864 745)                -
Proceeds from the disposal of property, plant and
equipment to settle trade payables                                   (18 000 000)                -      (1 606 397)
Change in working capital related to property, plant and
equipment                                                               7 512 548     (18 643 930)          670 452
Total                                                                  60 937 546      (6 506 144)        5 438 327

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

Notes to the Consolidated Financial Statements
For the years ended December 31, 2015 and December 31, 2014
(Presented in South African Rands)

1 NATURE OF OPERATIONS

Buffalo 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. On December 17, 2015, the shares of the Company
were delisted from the Toronto Stock Exchange ("TSX") and on December 18, 2015, trading commenced on the TSX
Venture Exchange ("TSXV"). In South Africa, on December 23, 2015, the shares of the Company were delisted from the
Main Board of the JSE Limited ("JSE") and on December 24, 2015, trading commenced on the Alternative Exchange
("AltX") operated by the JSE. As at financial year end December 31, 2015, Resource Capital Fund V L.P. ("RCF") owned
249 035 457 common shares of the Company ("Common Shares") representing approximately 88.7% of the then issued
and outstanding Common Shares. 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 29, 2016.

The Company owns a 100% interest in Buffalo Coal Dundee Proprietary Limited ("BC Dundee"), a South African company
with an interest in two operating coal mines in South Africa, namely the Magdalena bituminous mine ("Magdalena") and
the Aviemore anthracite mine ("Aviemore") which are both engaged in underground coal mining. 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 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 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 Nature of operations

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. Market conditions have deteriorated significantly
over the year and 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 performance at Magdalena deteriorated significantly over
the course of the period ended December 31, 2014, which resulted in the Company implementing a restructuring at BC
Dundee in March 2015 and a further restructuring in October 2015 together with the conclusion of agreements with STA
Coal Mining Company Proprietary Limited ("STA"). The arrangements with STA include the provision of contract mining
services by STA at Magdalena effective October 31, 2015 ("STA Contract Mining Agreement"), the sale of certain
underground mining equipment to STA ("STA Asset Sale Agreement") and an equity settlement arrangement ("STA
Equity Settlement Agreement") in terms of which a portion of the contract mining fees will be settled in Common
Shares, in order to further alleviate cash flow pressures. In addition, the Company secured funding from RCF in March
2015 and further funding from both RCF and Investec Bank Limited ("Investec") in December 2015. The Company
believes that, barring any further deterioration in the market and subject to its ability to meet current forecasts, it
should be able to generate positive cash flows in the foreseeable future.

As at December 31, 2015, the Company had a shareholders' deficiency and a working capital deficiency, and for the year
ended December 31, 2015, had a loss of R561.8 million. The Group was in breach of certain covenants with respect to its
borrowings from Investec (note 20) for which Investec has provided a waiver at December 31, 2015. There is no
assurance that the Company will be able to meet its covenants in the future, or that Investec will provide future waivers.
These matters constitute material uncertainties which cast significant doubt as to whether the Group can continue as a
going concern.

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 "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, 2015 and the financial results for the year ended December 31, 2015 were translated into Canadian
Dollars using a convenience translation at the rate of C$1:R11.2052, which is the exchange rate published on
Oanda.com as of December 31, 2015. 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, 2015 financial year-end:

Amendments to IAS 19 ? 'Defined Benefit Plans: Employee Contributions' - 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. This amendment has not had a
significant impact on the Group.

Annual Improvements to IFRSs 2010-2012 Cycle:

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, 'Property, Plant and Equipment' and IAS 38, 'Intangible Assets' - 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 amendments did not have a significant impact on the Group.

Annual Improvements to IFRSs 2011-2013 Cycle:

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 amendments did not have a significant impact on the Group.

The following standards, amendments and interpretations are issued but not yet effective for the December 31, 2015 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 date
to be determined ? early adoption is permitted
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, 2018
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 considerations 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.

Annual Improvements to IFRSs 2012-2014 Cycle ? effective January 1, 2016:

IFRS 5, 'Non-current Assets Held for Sale and Discontinued Operations' ? The amendments introduce specific guidance
for when an entity reclassifies an asset (or disposal group) from held for sale to held for distribution to owners (or vice
versa). The amendments clarify that such a change should be considered as a continuation of the original plan of
disposal and hence requirements set out in IFRS 5 regarding the change of sale plan do not apply. The amendments also
clarify the guidance for when held for distribution accounting is discontinued.

IFRS 7, 'Financial Instruments: Disclosures'- The amendments provide additional guidance to clarify whether a servicing
contract is continuing involvement in a transferred asset for the purpose of the disclosures required in relation to
transferred assets.

A further amendment removes the phrase 'and interim periods within those annual periods', clarifying that these IFRS 7
disclosures are not required in the condensed interim financial report. However, IAS 34 requires an entity to disclose 'an
explanation of events and transactions that are significant to an understanding of the changes in financial position and
performance of the entity since the end of the last annual reporting period'. Therefore, if the IFRS 7 disclosures provide
a significant update to the information reported in the most recent annual report, it would be expected that the
disclosures be included in the entity's condensed interim financial report.

IAS 19, 'Employee Benefits' ? The amendments clarify that the rate used to discount post-employment benefits
obligations should be determined by reference to market yields at the end of the reporting period on high quality
corporate bonds. The assessment of the depth of a market for high quality corporate bonds should be at the currency
level (i.e. the same currency as the benefits are to be paid). For currencies for which there is no deep market in such
high quality corporate bonds, the market yields at the end of the reporting period on government bonds denominated in
that currency should be used instead.

IAS 34, 'Interim Financial Reporting'- The amendment states that the required interim disclosures must either be in the
interim financial statements or incorporated by cross-reference between the interim financial statements and wherever
they are included within the greater interim financial report (e.g. in the management commentary or risk report).

The other information within the interim financial report must be available to users on the same terms as the interim
financial statements and at the same time. If users do not have access to the other information in this manner, then the
interim financial report is incomplete.

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").

(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) Change in functional and presentation currency

Due to the closure of the Toronto, Canada office during the year ended February 28, 2014 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 and presentation 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.

Subsequent to the Group restructuring during the year ended February 28, 2014, 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.

(b) 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.

(c) 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 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 Non-current assets held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered
principally through a sale transaction rather than through continuing use. This condition is regarded as met only when
the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for
sales of such asset and its sale is highly probable. Management must be committed to the sale, which should be
expected to qualify for recognition as a completed sale within one year from the date of classification.

Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs
to sell.

2.11 Financial instruments

2.11.1 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 and other long-term investments which are included in 'investment 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, and 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 2.13).

(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.

2.11.2 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.

2.11.3 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.

2.11.4 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'.

2.12 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.

2.13 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.

2.14 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.

2.15 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.

2.16 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.

2.17 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.

2.18 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.

2.19 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.

2.20 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.

2.21 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.

2.22 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, 2015, outstanding options, loans and warrants, as well as the potential shares issuable with regards
to the RCF Convertible Loan, referred to in note 21, 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 which 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 current
financial year, the Company's headline loss per share was adjusted for the loss on sale of property, plant and equipment
of R3.6 million (period ended December 31, 2014: profit of R0.2 million).

2.23 Comparative figures

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. 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, 2015, 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 R13.4 million (period
ended December 31, 2014: R4.1 million).

A 10% increase/(decrease) in the period end foreign exchange rate between the US Dollar and the Rand would have
increased/(decreased) the Group's profit or loss by approximately R41.1 million (period ended December 31, 2014:
R28.1 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, 2015, a 10% change in the API 4 coal price index would have resulted in a corresponding change in
export coal revenue of approximately R18.5 million (period ended December 31, 2014: R13.9 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 the current and prior financial year 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 (period ended December 31, 2014: R1.4 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 13 and 29,
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 totaling 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 16).

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, 2015
Borrowings                          25 714 284          164 977 422                    -
RCF loan facilities                          -          419 631 300                    -
Trade and other payables           161 400 972                    -                    -
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                    -                    -

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, 2015 and December 31, 2014 were as follows:

                                            December 31,        December 31,
                                                    2015                2014
Total borrowings                             595 527 082         333 497 243
Less: cash and cash equivalents             (20 365 446)        (12 120 081)
Net debt                                     575 161 636         321 377 162
Total equity                               (216 294 947)         244 600 498
Total capital                                358 866 689         565 977 660
Gearing ratio (net debt/total capital)              160%                 57%

Included within total borrowings is a convertible loan of R419.6 million (period ended December 31, 2014: R265.0
million). The Company's capital management objectives, policies and processes have remained unchanged during the
year ended December 31, 2015 except for the Investec loan as discussed in note 20 and the RCF loan facilities as
discussed in note 21.

The Company is not subject to any externally imposed capital requirements with the exceptions as discussed in note 20
and 21, and the capital requirements of the TSXV which requires adequate working capital or financial resources of the
greater of (i) C$50 000 and (ii) an amount required in order to maintain operations and cover general and administrative
expenses for a period of 6 months.

As of December 31, 2015, the Company may not be compliant with the policies of the TSXV. The impact of this violation
is not known and is ultimately dependent on the discretion of the TSXV.

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,
2015 and December 31, 2014:

                                       Level 1        Level 2       Level 3
                                             R              R             R
December 31, 2015
Investment in financial assets      35 674 589              -             -
Conversion option liability                       124 378 349             -
Warrant liability                            -      2 144 609             -
December 31, 2014
Investment in financial assets      29 134 182              -             -
Conversion option liability                 -      54 088 555             -
Warrant liability                           -       8 818 534             -

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

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 judgment 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.

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 coal price
forecasts, increases in estimated future costs of production, increases in estimated future capital costs, depreciation of
the Rand relative to the US Dollar, 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, 2015, based on management's estimate of the recoverable amount of the BC Dundee Group
properties, an impairment loss of R137.9 million was recorded. The impairment loss resulted in the write-down of
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 R27.7 million. If the foreign exchange rate between the Rand and
the US Dollar had been 5% higher than management's estimates, the Group would not have recognized any impairment
at December 31, 2015. An impairment loss of R90.9 million was recorded at December 31, 2014 as a result of
management's review, which resulted in the impairment of certain intangible assets and property, plant and equipment.

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 Taxes and recoverability of potential deferred tax assets

The Company is subject to income, value added, withholding and other taxes in various jurisdictions. Significant
judgment is required in determining the Company's provisions for taxes. There are many transactions and calculations
for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes
liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination
of the Company's income, value added, withholding and other tax liabilities requires interpretation of complex laws and
regulations often involving multiple jurisdictions. The Company's interpretation of taxation law as applied to
transactions and activities may not coincide with the interpretation of the tax authorities. All tax related filings are
subject to government audit and potential reassessment subsequent to the financial statement reporting period. Where
the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will
impact the tax related accruals and deferred income tax provisions in the period in which such determination is made.

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 judgment 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
judgments are used in applying valuation techniques.

These assumptions and judgments include estimating the future volatility of the stock price, expected dividend yield and
risk free rate of return.

Such judgments 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 29.

5 NATURE OF EXPENSES
                                                                        12 months ended      10 months ended
                                                                      December 31, 2015    December 31, 2014
Raw materials and consumables                                                36 150 641           46 108 149
Changes in inventories                                                       91 725 841          150 086 649
Mining overheads                                                             34 635 128            5 742 492
Mining sub-contractors                                                      129 069 003            9 718 650
Depreciation and amortization                                                76 151 497           75 463 018
Repairs and maintenance                                                      70 413 498           72 481 559
Salaries and wages                                                          197 831 865          203 065 653
Social development expenditure                                                4 048 699            3 721 371
Royalty tax expense                                                           6 440 722            4 662 862
Movement in provision for bad debts                                                   -          (1 687 032)
Auditors' remuneration                                                        2 738 365            1 282 668
Write-down of inventory to net realizable value                                     -             23 170 501
Transport costs - internal                                                   39 668 965           22 388 965
Railage, handling and wharfage                                               54 461 610           46 728 724
Legal, consulting and other professional fees                                16 558 337           17 614 447
Shareholder communication and listing fees                                    2 529 961            1 589 432
Stock-based compensation                                                        799 149              302 734
Other expenses                                                               16 898 944           15 536 487
Total                                                                       780 122 225          697 977 329
Cost of sales                                                               711 437 976          637 994 419
General and administration expenses                                          68 684 249           59 982 910
Total                                                                       780 122 225          697 977 329

6 OTHER (EXPENSE)/INCOME ? NET

                                                                        12 months ended      10 months ended
                                                                      December 31, 2015    December 31, 2014
Foreign exchange loss - net                                                (66 912 407)          (6 964 082)
Impairment of goodwill, intangible assets and property, plant and
equipment                                                                 (137 889 236)         (90 882 250)
Loss on remeasurement of non-current assets held for sale                  (10 833 333)                    -
Net (loss)/profit on disposal of property, plant and equipment              (3 602 813)              238 843
Scrap sales                                                                     453 705              732 682
Insurance proceeds                                                            4 211 595            3 556 563
Fair value adjustment on financial assets                                     1 668 921            1 793 054
Unrealized marked-to-market loss on securities                                 (31 729)             (96 974)
Fair value adjustment on conversion option and warrant liability            100 588 904           66 979 331
Loss on extinguishment of debt                                            (195 880 122)                    -
Other income                                                                    331 125            2 084 783
Total                                                                     (307 895 390)         (22 558 050)

Impairment loss

The impairment loss of R137.9 million relates to the impairment of property, plant and equipment which was impaired
as the carrying value of the BC Dundee Group properties exceeded the estimated recoverable amounts as at September
30, 2015 and December 31, 2015. At both these dates, management identified indicators of impairment and
determined the recoverable amount of the BC Dundee Group on a fair value less costs to sell basis. The fair value
calculations were determined using pre-tax cash flow projections on constant terms, based on the BC Dundee Group's LOM.

The fair value calculation is categorized 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, which are based on observable market
expectations. The pre-tax discount rate was estimated by calculating the Company's weighted average cost of capital
which was based on peer company information and other observable market inputs.

During the period ended December 31, 2014, an impairment loss of R90.9 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 the period ended December 31, 2014 to the financial year ended December 31, 2015.

There was significant estimation and judgment used when performing the fair value calculations (note 4.2 and 4.7). The
key assumptions used in the fair value less costs to sell calculations as at December 31, 2015, September 30, 2015 and
December 31, 2014 are as follows:

                                    December 31,2015   September 30, 2015        December 31, 2014
Pre-tax discount rate                         12.10%               13.32%                   12.37%
Gross fair value                      R416.9 million       R422.9 million           R550.5 million
Costs to sell                           R8.3 million         R8.5 million            R11.0 million
Recoverable amount                    R408.6 million       R414.5 million           R539.5 million

7 FINANCE INCOME AND EXPENSE
                                                        12 months ended       10 months ended
                                                      December 31, 2015     December 31, 2014
Finance income
Cash and restricted cash                                        849 975             1 073 085
Total                                                           849 975             1 073 085

Finance expense
Interest on borrowings                                     (14 790 356)          (11 951 006)
Interest on the RCF loan facilities                        (51 581 960)          (17 207 498)
Interest on STA short term loan                               (600 698)                     -
Unwinding discount on asset retirement obligation             (508 237)             (501 371)
Loan accretion                                             (20 220 933)           (7 651 686)
Other                                                       (2 598 731)             (113 764)
Total                                                      (90 300 915)          (37 425 325)

8 INCOME TAX

Income tax (expense)/benefit is comprised as follows:

                                                        12 months ended      10 months ended
                                                      December 31, 2015    December 31, 2014
Current tax:
Current tax on profits - South Africa                       (1 603 458)                    -
Prior year over provision - South Africa                              -          (8 094 166)
Deferred taxes - current year timing differences           (13 752 096)           62 699 746
Income tax (expense)/benefit                               (15 355 554)           54 605 580

The major items causing the Company's income tax (expense)/benefit to differ from the South African statutory rate of
28% (period ended December 31, 2014: 28%) are as follows:

Loss before income taxes                                  (546 469 100)         (163 046 393)

Expected tax benefit at statutory tax rates                 153 011 348            45 652 990
Adjustments resulting from:
Benefits of tax losses not recognized                     (180 885 346)             (319 439)
Income not subject to tax                                     1 836 093             1 641 771
Permanent differences                                       (1 392 915)           (4 078 714)
Foreign tax rate differential                               (2 766 412)               539 914
Prior year over provision                                             -           (8 094 165)
Other temporary differences                                  14 841 678            19 263 223
Income tax (expense)/benefit                               (15 355 554)            54 605 580

9 PROPERTY, PLANT AND EQUIPMENT

                                                                         Office
                                                                     equipment,    Development
                                    Land and                       fixtures and          costs
                                   buildings    Mining assets          fittings    capitalized    Mineral rights             Total
Year ended December 31, 2015
Opening net book value             6 749 456      325 505 350        2 577 350      49 908 345       176 663 415       561 403 916
Additions                            250 764       42 425 722          236 029      17 581 137                 -        60 493 652
Change in asset retirement
obligation                                 -      (4 242 640)                -               -                 -       (4 242 640)
Classified to held for sale                      (43 000 000)                -               -                 -      (43 000 000)
Disposals                                  -      (9 131 322)                -               -                 -       (9 131 322)
Remeasurement of assets held
for sale                                         (10 833 333)                -               -                 -      (10 833 333)
Impairment loss                            -                -                -               -     (137 889 236)     (137 889 236)
Depreciation                       (504 320)     (60 573 060)      (1 295 761)     (5 202 734)       (8 575 622)      (76 151 497)
Net book value at end of year      6 495 900      240 150 717        1 517 618      62 286 748        30 198 557       340 649 540
Year ended December 31, 2015
Cost                               9 695 468      626 444 487        7 653 445      75 769 181       328 943 756     1 048 506 337
Accumulated depreciation         (3 199 568)    (386 293 770)      (6 135 827)    (13 482 433)     (298 745 199)     (707 856 797)
Net book value at end of year      6 495 900      240 150 717        1 517 618      62 286 748        30 198 557       340 649 540

                                                                        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)      (69 200 952)      (80 394 543)
Depreciation                       (461 009)     (59 916 714)      (1 108 121)     (3 248 245)       (9 710 636)      (74 444 726)
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 December 31, 2014
Cost                               9 444 705      704 393 499        7 417 420      58 188 044       328 943 757     1 108 387 425
Accumulated depreciation         (2 695 249)    (378 888 149)      (4 840 070)     (8 279 699)     (152 280 342)     (546 983 509)
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

Office equipment includes items to the value of R0.1 million (period ended December 31, 2014: R0.3 million) 
that are not directly used in production and operations and relate to property, plant and equipment in the 
Company's corporate office in South Africa. All property, plant and equipment is located in South Africa. 
Depreciation expense of R76.2 million (period ended December 31, 2014: R74.4 million) was recognized in 'cost of sales'.

The impairment loss of R137.9 million (period ended December 31, 2014: R69.2 million) relates to the impairment of
property, plant and equipment which were impaired as the carrying value of the BC Dundee Group properties exceeded
the estimated recoverable amount as determined by the impairment review performed by management (note 6).

Mining assets classified as held for sale are as follows:

                                                           December 31, 2015     December 31, 2014
Opening balance                                                            -                     -
Transfer from property, plant and equipment                       43 000 000                     -
Disposals                                                       (18 000 000)                     -
Closing balance                                                   25 000 000                     -

The non-current assets held for sale comprise the two continuous miners sold to STA. In accordance with IFRS 5, the
assets were written down to their fair value less costs to sell of R43.0 million which was based on an independent
valuation and which was incorporated into the STA Asset Sale Agreement. The remaining asset was disposed of
subsequent to December 31, 2015.

10 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                             -                      -               -

All intangible assets originated from South Africa. The amortization expense of R1.0 million in the period ended
December 31, 2014 was recognized in 'cost of sales'.

The impairment loss of R10.5 million in the period ended December 31, 2014 was recognized as a result of
management's impairment review as of December 31, 2014 (note 6).

11 INVESTMENT IN FINANCIAL ASSETS

                                                             December 31, 2015   December 31, 2014
Long-term investments                                               35 524 519          28 967 044
Security investments                                                   150 070             167 138
Total                                                               35 674 589          29 134 182

The movement in the investment in financial assets is as follows:

                                                               December 31, 2015 December 31, 2014
Opening balance                                                       29 134 182        23 586 748
Current year contributions                                             4 888 554         3 846 794
Fair value adjustment                                                  1 668 921         1 793 054
Unrealized marked-to-market gain on securities                          (31 269)          (96 974)
Effect of foreign currency exchange difference                            14 201             4 560
Closing balance                                                       35 674 589        29 134 182

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, and 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.

12 DEFERRED TAX

South Africa                                                 December 31, 2015   December 31, 2014
Deferred income tax liabilities:
At beginning of year                                             (44 737 339)         (78 338 597)
Current year timing differences                                    44 737 339           33 601 258
Effect of foreign currency exchange difference                              -                    -
Foreign currency translation adjustment                                     -                    -
At end of year                                                              -         (44 737 339)
Deferred tax asset:
At beginning of year                                               60 232 927           31 134 346
Current year timing differences                                    82 770 367           29 098 581
Unrecognized deferred tax asset                                 (140 136 695)                    -
Utilization of assessed loss                                      (1 123 107)                    -
At end of year                                                      1 743 492           60 232 927
Deferred tax asset/(liability) - net                                1 743 492           15 495 588

The above balance is comprised of the following:

South Africa                                                  December 31, 2015  December 31, 2014
Provisions                                                            6 276 518          8 478 229
Tax losses                                                           31 596 136         77 490 022
Property, plant and equipment and other long-term assets           (36 061 299)       (70 159 975)
Other                                                                  (67 863)          (312 688)
At end of year                                                        1 743 492         15 495 588

Canada                                                     December 31, 2015     December 31, 2014
Deferred income tax liabilities:
At beginning of year                                             (9 458 273)                     -
Current year timing differences                                    7 774 893           (9 458 273)
At end of year                                                   (1 683 380)           (9 458 273)
Deferred tax asset:
At beginning of year                                               9 458 273                     -
Current year timing differences                                  (7 774 893)             9 458 273
At end of year                                                     1 683 380             9 458 273
Deferred tax asset/(liability) - net                                       -                     -

The above balance is comprised of the following:

Canada                                                      December 31, 2015    December 31, 2014
Tax losses                                                          1 683 380            9 458 273
Other                                                             (1 683 380)          (9 458 273)
At end of year                                                              -                    -

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

Canada                                                       December 31, 2015   December 31, 2014
Tax losses (expiring between 2027 and 2035)                        284 148 107         143 970 672
Other                                                               61 130 836          35 874 684
Total                                                              345 278 943         179 845 356
Total C$                                                            30 814 170          18 013 898

As at December 31, 2015, the Company had an unrecognized deferred tax asset of approximately R480.0 million (period
ended December 31, 2014: R135.0 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.

13 TRADE AND OTHER RECEIVABLES

                                                            December 31, 2015    December 31, 2014
Non-current other receivables:
- Deposits                                                          4 099 242           14 238 959
Total non-current other receivables                                 4 099 242           14 238 959
Current trade and other receivables:
- Trade receivables                                                66 217 129           79 522 493
  Less: Provision for impairment of receivables                     (969 478)            (969 478)
- Trade receivables - net                                          65 247 651           78 553 015
- Value-Added Tax (VAT)                                             5 497 824           13 703 448
- Prepayments                                                       3 948 987            2 641 470
- Harmonized Sales Tax (HST)                                          257 006              107 263
- Other receivables                                                   630 213              469 763
Total current trade and other receivables                          75 581 681           95 474 959

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.

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

                                                             December 31, 2015   December 31, 2014
Canadian Dollars                                                       593 609             557 393
United States Dollars                                               15 202 423           6 396 228
Rands                                                               59 785 649          88 521 338
Total                                                               75 581 681          95 474 959

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

                                                             December 31, 2015   December 31, 2014
Opening balance                                                        969 478           2 655 629
Provision (released)/raised, net                                             -         (1 686 151)
Closing balance                                                        969 478             969 478

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.

14 INVENTORIES

                                                             December 31, 2015   December 31, 2014
Consumables                                                          1 934 854           2 293 150
Work in progress                                                     3 466 633           3 262 337
Finished goods                                                      36 824 385          21 479 480
Total                                                               42 225 872          27 034 967

Depreciation of R0.3 million (period ended December 31, 2014: R1.0 million) is included within inventory at December
31, 2015. The amount of inventories recognized as an expense during financial year ended December 31, 2015 is R601.2
million (period ended December 31, 2014: R552.9 million).

15 NON-INTEREST BEARING RECEIVABLES

                                                             December 31, 2015   December 31, 2014
Other                                                                1 697 948           1 587 765

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

16 RESTRICTED CASH

Restricted cash comprises of deposits with FNB of R3.2 million (period ended December 31, 2014: R3.2 million) in
respect of guarantees provided to the Department of Mineral Resources ("DMR") and Eskom, and R8.0 million (period
ended December 31, 2014: R8.0 million) in respect of guarantees provided to Transnet Freight Rail ("TFR").

17 CASH AND CASH EQUIVALENTS

                                                             December 31, 2015   December 31, 2014
Cash in bank                                                        20 365 446          12 120 081
Cash is denominated in the following currencies:
Canadian Dollars                                                       318 563             306 868
United States Dollars                                                3 456 661           2 195 326
Rands                                                               16 590 222           9 617 887
Total                                                               20 365 446          12 120 081

18     SHARE CAPITAL

                                                             Number of shares         Stated value
Balance at March 1, 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
Shares issued in relation to RCF Convertible Loan                 146 734 858           69 095 412
Shares issued in relation to Private Placement to RCF              72 272 480           28 705 063
Shares issued to directors and management                           5 525 000            2 329 585
Balance at December 31, 2015                                      280 729 049        1 038 096 502

The Company is authorized to issue an unlimited number of Common Shares at no par value.

As set out in further detail in note 21, the Company has raised an aggregate US$29 million convertible loan from RCF, in
respect of which interest is settled by the Company by way of the issue of Common Shares to RCF at the 20-day volume
weighted average price ("VWAP") as at the date the interest is due. 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") were entered
into in September 2013 and February 2014 respectively, and on July 3, 2014, BC Corp closed the final tranche of US$15.0
million resulting in an aggregate US$25.0 million convertible loan facility ("RCF US$25 million Loan") ("First Amended
RCF Agreement"). On March 27, 2015, BC Corp entered into a second amended and restated convertible loan
agreement with RCF ("Second Amended RCF Agreement") to secure an additional US$4.0 million loan facility
(collectively with the RCF US$25 million Loan, the "RCF Convertible Loan"). On December 2, 2015, BC Corp entered into
a third amended and restated convertible loan agreement with RCF ("Third Amended RCF Agreement").

During the financial year ended December 31, 2015:
    - The Company issued 26 195 466 Common Shares to RCF at prices ranging between C$0.0502 and C$0.0962 to
        settle interest on the RCF US$25 million Loan for the period between January 1, 2015 and June 30, 2015.
    - The Company issued 52 509 219 Common Shares to RCF at prices ranging between C$0.0439 and C$0.0682 to
        settle interest on the RCF Convertible Loan for the period between July 1, 2015 and October 31, 2015.
    - The Company issued 11 066 421 Common Shares to RCF at C$0.044 to settle interest on the RCF Convertible
        Loan for the period between November 1, 2015 and December 3, 2015.

During the period ended December 31, 2014:
    - The Company issued 5 324 449 Common Shares to RCF at prices ranging between C$0.0787 to C$0.1247 to settle
      interest on the RCF Original Convertible Loan and the RCF Bridge Loan for the period between March 1, 2014
      and June 30, 2014.
    - In July 2014, the Company issued 5 531 120 Common Shares to RCF at a price of C$0.1446 per share to settle the
      5% establishment fee due in respect of the First Amended RCF Agreement.
    - The Company further issued 9 264 060 Common Shares to RCF at prices ranging between C$0.0982 and
      C$0.1308 to settle interest on the RCF US$25 million Loan for the period between July 1, 2014 and December 31,
      2014.

In July 2015, Restricted Share Units ("RSUs") to the value of C$0.1 million, which were previously allocated to a director
of the Company, were settled through the issuance of 2 083 333 Common Shares at a price of C$0.048. Given the
current financial situation and restructuring initiatives of the Company, on April 20, 2015, the Company approved the
settlement of performance bonuses to senior management of the Company in Common Shares at an issuance price of
C$0.048. On July 10, 2015, 3 441 667 shares were issued to senior management.

In terms of the Third Amended RCF Agreement, RCF also agreed to convert an aggregate of US$20.0 million of the RCF
Convertible Loan into Common Shares over a two-year period at the conversion price of C$0.0469 per Common Share
("RCF Conversion"), subject to a minimum conversion of US$10.0 million in the first year. An initial amount of US$2.0
million was converted on December 3, 2015 ("RCF First Tranche Conversion") resulting in 56 963 752 Common Shares
being issued to RCF.

Further to the above, on December 2, 2015, BC Corp entered into a subscription agreement with RCF, whereby RCF
subscribed for US$2.0 million in equity by way of a private placement ("Private Placement"). Pursuant to the Private
Placement, RCF acquired 72 272 480 Common Shares at a price of C$0.0367 per Common Share.

19    RESERVES
                                                                Weighted average
                                       Number of options     exercise price (C$)    Value of options
Balance at March 1, 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
Granted and vested                             4 427 397                    0.06             843 224
Expired/cancelled                            (1 070 599)                    0.45         (3 716 136)
Closing balance at December 31, 2015           5 864 048                    0.26           7 653 184

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. A new plan was adopted by the Board of Directors on November 30,
2015, as required in terms of the move by the Company from the TSX to the TSXV as referred to in note 1. The plan will
be ratified by shareholders at the next annual general meeting of the Company.

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, directors, officer,
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 discounted market price of the underlying
Common Shares at the time of grant. Each 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 April 20, 2015, 4 177 397 share options were granted to directors and employees of the Company with one third
vesting immediately. The balance will vest equally on April 20, 2016 and 2017 respectively.

On November 10, 2015, 250 000 share options were granted to directors of the Company with one third vesting
immediately. The balance will vest equally on November 10, 2016 and 2017 respectively.

On August 12, 2014, 375 000 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 respectively. 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
using the Black-Scholes option pricing model. Refer below for the assumptions used in the valuation model.

An amount of R0.8 million (period ended December 31, 2014: R0.3 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 and
officers. The options expire five years from the date of issue, or immediately upon 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, 2015   December 31, 2014
March 15, 2010                                                         2.80                  -              50 000
March 24, 2011                                                         4.10             75 000              75 000
June 13, 2011                                                          2.77            150 000             150 000
January 25, 2012                                                       1.80            100 000             200 000
August 13, 2013                                                        0.29          1 236 000           1 657 250
August 12, 2014                                                        0.11            250 000             375 000
April 20, 2015                                                         0.07          3 803 048                   -
November 10, 2015                                                      0.04            250 000                   -
Total                                                                                5 864 048           2 507 250

The weighted average remaining contractual life on share options outstanding at December 31, 2015 is 3.74 years
(period ended December 31, 2014: 2.92 years). Of the 5 864 048 options outstanding at December 31, 2015 (period
ended December 31, 2014: 2 507 250), 3 078 689 options (period ended December 31, 2014: 2 257 251) were exercisable.

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

Valuation details
Grant date                                                     November 10, 2015   April 20, 2015   August 12, 2014
Fair value (R)                                                            78 077        1 235 235           302 734
Option strike price (C$)                                                    0.04             0.07              0.11
Share price on grant date (C$)                                              0.05             0.06              0.11
Expiry date                                                    November 10, 2020   April 20, 2020   August 12, 2019
Remaining contractual life at year-end                                      4.87             4.31              4.62
Valuation assumptions:
Expected volatility (%)                                                       75               62               102
Expected life of grant (years)                                                 5                5                 5
Annual risk-free interest rate (%)                                          0.82             0.98              1.66
Expected dividend yield (%)                                                    0                0                 0

Restricted Share Units

The Company has a RSU Incentive Plan in place in terms of which 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.

In July 2015, RSUs to the value of C$0.1 million, which were previously allocated to a director of the Company, were
settled through the issuance of 2 083 333 Common Shares at a price of C$0.048. As of December 31, 2015, no RSUs were
granted (period ended December 31, 2014: R1.0 million worth of RSUs were granted but not issued under the plan)
(note 28).

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'.

20 BORROWINGS

Borrowings consist of the Investec loan facilities as detailed below:

                                                              December 31, 2015  December 31, 2014
Investec loan facilities                                            169 250 278        138 047 902
Current portion                                                    (25 714 284)        (6 000 000)
Long-term portion                                                   143 535 994        132 047 902

On July 3, 2014, BC Dundee finalized a restructuring of the Investec loan facilities ("First Amended Investec Agreement")
on the following terms:

-     five-year senior secured amortizing term loan facility of R90.0 million (the "Term Loan Facility"). The Term Loan
      Facility accrues interest monthly at JIBAR plus 4%, with only interest having been payable on a quarterly basis up
      to December 2015. The first principal payment was due in December 2015 (refer below for the Third Amendment)
      and going forward, principal payments are due on a quarterly basis. The First Amended Investec Agreement
      required the Company to make payments if excess cash was available during the 18 month grace period up to
      December 2015 up to a maximum of R4.5 million on a quarterly basis. No such payments were made during the
      period;
-     five-year senior secured loan facility of R50.0 million (the "Bullet Facility"). The Bullet Facility is repayable by way
      of a bullet repayment at the end of the facility life. The Bullet Facility accrues interest monthly at JIBAR plus 4%
      with the first interest payment having been due in December 2015 and quarterly repayments of interest to be
      made going forward; and
-     five-year senior secured revolving credit facility of R30.0 million (the "Working Capital Facility"). The Working
      Capital Facility is repayable on the final maturity date being July 3, 2019, and bears interest at prime plus 0.5%,
      payable monthly.

On December 2, 2015, BC Dundee closed a second amended and restated loan agreement with Investec ("Second
Amended Investec Agreement"), whereby Investec agreed to extend the Working Capital Facility from R30.0 million to
R80.0 million, which funds would be made available in two tranches of R25.0 million each. The conditions to the first
tranche, which included the conclusion of the RCF funding arrangements as set out below, were fulfilled and R25.0
million was drawn by BC Dundee from the Working Capital Facility in December 2015. The second tranche remained
subject to the Company demonstrating its plan to sell the majority of its anthracite stockpile, which has built up as a
result of depressed markets both domestically and globally. The condition was fulfilled and R25.0 million drawn by BC
Dundee from the Working Capital Facility in March 2016.

On December 18, 2015, BC Dundee entered into a third amendment to the Investec loan agreement ("Third
Amendment"), in terms of which the repayment schedule for the Term Loan Facility was replaced with a new schedule
with principal repayments commencing on March 31, 2016. Refer below for the new repayment schedule.

In terms of the First Amended Investec Agreement, BC Dundee was required to meet specified debt covenants from
December 31, 2015. BC Dundee was in breach of certain of these covenants at this date. Upon breach, Investec is
entitled to request early payment of the outstanding debt, however when it became apparent that the covenants were
to be breached, Investec was approached and has waived the breach of the covenants as at December 31, 2015.

As of December 31, 2015, R190.7 million (period ended December 31, 2014: R162.2 million) had been drawn pursuant to
the Investec loan facilities. The Group was fully drawn on each of the Term Loan Facility, Bullet Facility and Working
Capital Facility available as at that date for the financial years ended December 31, 2015 and December 31, 2014.

The movement in the Investec borrowings is as follows:

                                                                            December 31, 2015     December 31, 2014
Opening balance                                                                   138 047 902           155 997 480
Interest accrued                                                                            -             1 124 453
Net repayment of working capital facility                                                   -             5 251 023
Balance after restructuring of investec facility                                  138 047 902           162 372 956
Warrants issued                                                                             -          (22 987 796)
Accretion of warrant asset                                                          2 528 568             1 101 202
Restructuring fee capitalized to loan facility                                              -             2 280 000
Restructuring costs                                                                         -           (2 733 605)
Amortisation of deferred cost                                                         403 483                     -
Accretion expense                                                                           -               246 721
Interest accrued                                                                    3 657 707             2 148 750
Net drawdown from working capital facility                                         41 632 006             5 786 048
Repayments                                                                       (17 019 388)          (10 166 374)
Closing balance                                                                   169 250 278           138 047 902


Following the Third Amendment, the Investec facilities are repayable as follows:

                                                                             December 31, 201     December 31, 2014
12 months                                                                          25 714 284             6 000 000
13-24 months                                                                       25 714 284            24 000 000
25-36 months                                                                       25 714 284            24 000 000
37-48 months                                                                      113 548 854            24 000 000
49-60 months                                                                                -            24 000 000
Greater than 60 months                                                                      -            60 228 930
Total                                                                             190 691 706           162 228 930

In connection with the First Amended Investec Agreement, 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 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 35.5%.

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, 2015 was obtained using the Black-Scholes option pricing model
and the following assumptions: expected volatility of 75.9%, life of 3.5 years, risk-free interest rate of 0.6% and an
expected dividend yield of 0% (period ended December 31, 2014: 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, 2015     December 31, 2014
Opening balance                                                                     8 818 534                     -
Warrant option liability                                                                    -            22 987 796
Fair value adjustment                                                             (6 830 115)          (13 962 287)
Foreign exchange differences                                                          156 190             (206 975)
Closing balance                                                                     2 144 609             8 818 534

The Investec facilities are secured as follows:

BC Corp entered into the following security agreements with Investec - a cession in security over its bank account held
with Investec, a cession in security over its bank accounts held in Canada and a pledge and cession in securitatem debiti
of all the shares, securities and other ownership interests of BC Corp in BC Dundee and BC and debt claims against BC
Dundee, BC and Zinoju.

BC Dundee entered into the following security agreements with Investec - a cession in security granted by BC Dundee 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 and all the bank accounts of BC Dundee and all rights to cash balances standing to the credit of those bank
accounts. BC Dundee also entered into a pledge and cession in securitatem debiti of all BC Dundee's shares in and
claims against Zinoju.

BC Dundee has passed a first-ranking covering mortgage bond over certain land and a first-ranking special notarial bond
over specified movable property of BC Dundee and a first and second ranking general notarial bond over all of BC
Dundee's movable assets.

21 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, for 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. 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, 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 the First Amended RCF Agreement for the secured RCF US$25 million
Loan 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 Loan. 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 Loan upon shareholder approval
with the same terms and conditions as the RCF US$25 million Loan.

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 which was released as set out below).

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 Loan 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, the RCF Convertible
Loan, which was convertible at a price of C$0.1446 per Common Share and matured on June 30, 2019. The RCF
Convertible Loan bore interest at 12% 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.

There were two types of advances per the First Amended RCF Agreement in respect of the advance of the final
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
       were advanced by RCF directly to equipment suppliers on behalf of the Company.

In terms of the First Amended RCF Agreement, RCF took a first ranking special notarial bond over the new equipment as
specified in the First Amended RCF Agreement and acquired using the proceeds of the RCF Convertible Loan. In
addition, RCF took second ranking security over BC Dundee's shares and all other moveable and immovable assets 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.

On March 27, 2015, BC Corp closed the Second Amended RCF Agreement and secured an additional US$4.0 million loan
facility which was advanced as a bridge loan ("2015 Bridge Loan"). On June 19, 2015, upon the Company receiving
shareholder approval at the annual and special meeting of shareholders, the 2015 Bridge Loan rolled over into the RCF
Convertible Loan, under the same terms and conditions except for the amendments to the interest rate and conversion
price on the full US$29.0 million facility as set out below.

The 2015 Bridge Loan bore interest at a rate of 15% per annum, payable on the maturity date which was the earlier of
the date on which the shareholder approval was received or June 30, 2015. No establishment fees were incurred on the
2015 Bridge Loan. Upon receipt of the shareholder approval, interest became payable in Common Shares at a price per
share equal to the 20-day VWAP as at the date the payment was due. In addition, the interest rate on the RCF
Convertible Loan was increased to 15% per annum and the conversion price was decreased to C$0.0469, a 25% discount
to the 5-day VWAP as at January 30, 2015.

In terms of IAS 39, Financial Instruments: Recognition and Measurement, the revised terms of the Second Amended RCF
Agreement were considered substantially different to those of the RCF US$25 million Loan. Consequently, IAS 39
required an extinguishment of the RCF US$25 million Loan and the recognition of a new financial liability. A resultant
loss on extinguishment of debt of R111.8 million was recognised, which had no cash flow impact on the Group.

On December 2, 2015, BC Corp entered into the Third Amended RCF Agreement, whereby RCF agreed to the RCF
Conversion in terms of which it will convert an aggregate of US$20.0 million of the RCF Convertible Loan into Common
Shares over a two-year period at the conversion price of C$0.0469 per Common Share, subject to a minimum conversion
of US$10.0 million in the first year. The RCF First Tranche Conversion of US$2.0 million was converted on December 3,
2015 on the closing of the transactions with RCF and Investec as described herein resulting in 56 963 752 Common
Shares being issued to RCF.

The balance of the RCF Convertible Loan will remain in place on existing terms, other than the interest being settled
quarterly not monthly, and in respect of certain amendments to the interest provisions as detailed below:

-     Prior to the date of completion of the RCF Conversion, interest will be settled through the issuance of Common
      Shares, priced at the 20-day VWAP. Following the date of completion of the RCF Conversion, interest will be
      payable in cash subject to BC Dundee having paid Investec its scheduled principal repayment for the prior quarter.
      If Investec's principal repayment has not been made, RCF's interest will accrue until such time as Investec has
      been paid, subject to RCF's election for interest to be settled through the issuance of Common Shares.
-     As of the date the Company was delisted from the TSX, the percentage interest rate is determined as follows:
            - If the 20-day VWAP is greater than C$0.05 per Common Share then the interest rate will be 15% per
                annum;
            - If the 20-day VWAP is less than or equal to C$0.0313 per Common Share then the interest rate will be
                24% per annum; and
            - If the 20-day VWAP is greater than C$0.0313 but less than C$0.05 per Common Share then the interest
                rate will be calculated as 0.0075/20-day VWAP.

In terms of IAS 39, Financial Instruments: Recognition and Measurement, the revised terms of the Third Amended RCF
Agreement were considered substantially different to those of the Second Amended RCF Agreement. Consequently, IAS
39 required an extinguishment of the RCF Convertible Loan as accounted for in terms of the Second Amended RCF
Agreement and the recognition of a new financial liability. A resultant loss on extinguishment of debt of R84.0 million
was recognised, which had no cash flow impact on the Group. The new financial liability has been recognized in two
parts as set out below.

In terms of the Third Amended RCF Agreement, RCF has also released all security held in respect of the RCF Convertible
Loan, including the guarantee from BC Dundee.

As of December 31, 2015, the Company was fully drawn on the US$27.0 million (R419.6 million) RCF Convertible Loan,
after the RCF First Tranche Conversion. As of December 31, 2014, the Company had drawn US$22.8 million (R265.0
million of the RCF US$25 million Loan and had US$2.2 million (approximately R22.0 million) available for drawdown.

The movement in the RCF Convertible Loan is as follows:

                                                                             December 31, 2015    December 31, 2014
Opening balance                                                                    132 542 252           91 610 592
Adjustment due to modification of debt                                                      -             8 554 152
Extinguishment of debt                                                             342 940 670                    -
RCF First Tranche Conversion                                                      (14 354 277)                    -
Loan proceeds                                                                       74 395 051          139 637 969
Conversion option liability                                                      (308 192 739)        (107 724 257)
Loan issue costs                                                                     (134 253)         (14 788 621)
Accretion expense                                                                   17 691 471            6 303 763
Effect of foreign currency exchange difference                                      54 865 670            8 948 655
Long-term portion of RCF loan facilities                                           299 753 845          132 542 252

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$27.0 million (approximately R419.6 million) (period ended December 31, 2014: US$22.8 million
(approximately R265.0 million)) using the effective interest rate method at approximately 39.1% (period ended
December 31, 2014: 34.2%). The movement in the conversion option liability is as follows:

                                                                             December 31, 2015    December 31, 2014
Opening balance                                                                     54 088 555            7 828 422
Extinguishment of debt                                                           (147 060 548)                    -
RCF First Tranche Conversion                                                       (8 308 530)                    -
Reversal of option liability due to modification of debt                                     -          (7 828 422)
Conversion option liability                                                        308 192 739          107 724 257
Fair value adjustment                                                             (93 781 283)         (53 536 779)
Foreign currency translation adjustment                                             11 247 416             (98 923)
Closing balance                                                                    124 378 349           54 088 555

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 51% and 107%, life of between 3.9-5.0 years,
risk-free interest rate of 0.5%-1.5% and expected dividend yield of 0%.

The fair value of the conversion option liability at December 31, 2015 was obtained using the Black-Scholes option
pricing model and the following assumptions: expected volatility of 82%, life of 3.5 years, risk-free interest rate of 0.6%
and expected dividend yield of 0% (period ended December 31, 2014: 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 First 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.

In terms of the Third Amended RCF Agreement, RCF has released all security held in respect of the RCF Convertible Loan,
including the guarantee from BC Dundee.

Private Placement

In addition to the above, BC Corp also entered into a subscription agreement with RCF on December 2, 2015, whereby
RCF subscribed for an additional US$2.0 million (approximately R28.7 million) in equity. Pursuant to the Private
Placement, RCF acquired 72 272 480 Common Shares at a price of C$0.0367 per Common Share.

22 ASSET RETIREMENT OBLIGATION

                                                                              December 31, 2015   December 31, 2014
Opening balance                                                                      21 422 396          34 593 321
Change in estimate                                                                  (3 766 178)        (13 170 925)
- Included in property, plant and equipment                                         (4 242 640)        (12 710 950)
- Reversal of provision                                                                (31 771)           (961 346)
- Unwinding of discount                                                                 508 233             501 371
Closing balance                                                                      17 656 218          21 422 396
Current portion                                                                     (2 664 205)         (2 664 209)
Non-current portion                                                                  14 992 013          18 758 187

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 11). 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 19-24 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, 2015    December 31, 2014
Discount rate (%)                                                                        10.19                  8.5
Inflation rate (%)                                                                        5.80                 5.60

23 TRADE AND OTHER PAYABLES

                                                                             December 31, 2015    December 31, 2014
Trade payables                                                                     108 928 655           75 323 420
Audit fees                                                                           1 099 190              779 325
Receiver of Revenue - VAT                                                                    -            2 088 786
Deferred revenue                                                                     1 298 219           16 876 846
Sundry payables and accruals                                                        39 588 615           42 643 349
Short-term instalment sale agreement                                                         -           18 643 930
Leave pay provision                                                                 10 486 295           14 151 229
Total                                                                              161 400 974          170 506 885

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

During the prior 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 and ending November 2015. Interest was 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 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 was the Company's provision of R8.4 million (R13.7
million including leave pay) which was 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 was fully utilized in 2015.

Included in trade payables as of December 31, 2015 is R25.6 million owing to STA for which repayment has been
deferred on terms agreed with STA. Interest is accruing monthly on the amount from October 1, 2015 at the prime bank
overdraft rate in South Africa.

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

                                                                              December 31, 2015   December 31, 2014
Canadian Dollars                                                                      8 903 998           3 241 320
United States Dollars                                                                 2 817 333          19 669 960
Rands                                                                               149 646 814         147 569 877
Great Britain Pound                                                                      32 829              25 728
Total                                                                               161 400 974         170 506 885

24 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") would 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.

25 FINANCIAL INSTRUMENTS BY CATEGORY

The Company's financial assets and financial liabilities as at December 31, 2015 and December 31, 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, 2015
Trade and other receivables (excluding
non-financial assets)                     65 247 651                 -                                   -      65 247 651
Investments in financial assets                    -        35 674 589                                   -      35 674 589
Cash (excluding restricted cash)          20 365 446                 -                                   -      20 365 446
Non-interest bearing receivables           1 697 948                 -                                   -       1 697 948
Investec borrowings                                -                 -       (2 144 609)     (169 250 278)   (171 394 887)
RCF loan facilities                                                        (124 378 349)     (299 753 846)   (424 132 195)
Trade and other payables (excluding
non-financial liabilities)                         -                 -                 -     (160 102 755)   (160 102 755)


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)

26 CASH UTILIZED IN OPERATIONS

                                                                                   December 31, 2015     December 31, 2014
Loss before income tax                                                                 (546 469 100)         (163 046 393)
Adjusted for:   
Depreciation and amortization                                                             76 151 497            75 463 018
Impairment of property, plant and equipment and goodwill
and other intangible assets                                                              137 889 236            90 882 250
Unrealized foreign exchange loss/(gain)-net                                               66 739 574             6 962 451
Impairment of trade receivables                                                                (881)           (1 687 032)
Net (loss)/profit on disposal of property, plant and equipment                             3 602 813             (238 843)
Fair value adjustment on investments in financial assets                                 (1 637 192)           (1 696 080)
Fair value adjustment on conversion option and warrant liability                       (100 588 904)          (66 979 331)
Write-down of inventory to net realizable value                                                    -            23 170 501
Reversal of asset retirement obligation provision                                           (31 771)             (961 346)
Stock-based compensation                                                                     799 149               302 734
Loss on remeasurement on assets held for sale                                             10 833 333                     -
Loss on extinguishment of debt                                                           195 880 122                     -
Shares issued to directors and management                                                  2 329 585                     -
Finance income - cash                                                                      (849 975)           (1 073 085)
Finance cost ? cash                                                                       13 929 495             8 787 101
Finance cost ? non-cash                                                                   76 371 420            28 638 224
Net changes in working capital                                                            13 567 704          (14 142 056)
Cash utilized in operations                                                             (51 483 895)          (15 617 886)

27 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 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").

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.

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 has any further claim, right, liability and/or duty of any
kind towards the other party in respect of either claim.

28 RELATED PARTIES

The Company has entered into the following transactions in the ordinary course of business with related parties:

                                                                             December 31, 2015   December 31, 2014
Payments for services rendered
RCF(1)                                                                               3 408 092           2 966 708
Total                                                                                3 408 092           2 966 708

The following balances were outstanding at the end of the reporting period:

                                                                             December 31, 2015   December 31, 2014
Related party payables
RCF(1)                                                                               9 284 251           2 758 777
Total                                                                                9 284 251           2 758 777

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

(1) RCF is a related party to the Company as a result of owning a controlling investment in the Company and having a
    representative, Mr. David Thomas on the Board of Directors of the Company. As set out in the Second and Third
    Amended RCF Agreements, 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, 2015, which amounted to R51.6 million (period ended December 31,
    2014: R17.2 million) (note 18).

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 was as
follows:

                                                                             December 31, 2015   December 31, 2014
Short-term benefits                                                                 16 861 296          13 007 957
Share-based payments                                                                   799 149             302 734
Total                                                                               17 660 445          13 310 691

During the year ended December 31, 2015, 3 649 397 and 250 000 share options were granted to directors and officers
of the Company on April 20, 2015 and November 10, 2015 respectively, with a portion vesting immediately and the
balance vesting over a two-year period (period ended December 31, 2014: 375 000 share options). The fair value of
these share options was estimated to be R1.2 million using the Black-Scholes option pricing model (period ended
December 31, 2014: R0.3 million).

In July 2015, RSUs to the value of C$0.1 million were settled through the issuance of 2 083 333 Common Shares at a
price of C$0.048. This amount was accrued as of December 31, 2014. Amounts owing to directors and other key
management personnel were R0.2 million as of December 31, 2015 as compared to R1.5 million at December 31, 2014.

29 COMMITMENTS AND CONTINGENCIES

Management Contracts

Certain management contracts require that payments of approximately R14.0 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, 2015.

During the year ended December 31, 2015, the Company entered into a retention agreement with key management
personnel. The contract contains a minimum commitment of R5.6 million until December 31, 2016.

STA Contract Mining Agreement

In terms of the STA Contract Mining Agreement, STA is mining four sections at Magdalena underground mine at a fixed
contract mining fee per ton, effective October 31, 2015. The STA Contract Mining Agreement has a three year term, and
the option for a further two year extension if agreed to by all parties. In terms of the STA Equity Settlement Agreement,
a portion of the contract mining fees will be settled in Common Shares, in order to further alleviate cash flow pressures.

The STA Contract Mining agreement can be terminated on 60 days notice for which period the Company will be liable
for payment for the tons mined at the fixed rate per ton.

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, 2015   December 31, 2014
Property, plant and equipment                                                    1 754 679          27 378 909

Included in the R27.4 million disclosed as of December 31, 2014 were commitments relating to the purchase of
machinery and equipment which was funded by equipment advances from RCF.

In terms of Regulation 8.10 of the Mine Health and Safety Act, 29 of 1996 Regulations, the Company is required to take
reasonably practicable measures to ensure that pedestrians are prevented from being injured as a result of collisions
between trackless mobile machines and pedestrians, by way of the installation of proximity devices on specified
machines. The Company is currently investigating its options in this regard. The Company has proposed the phase in of
such devices over a five year period.

Environmental and Regulatory Contingency

The Company's mining and exploration activities are subject to various laws and regulations governing the environment
and mine operations. 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 March 20, 2015, AMCU brought an application against BC Dundee and Zinoju in the Labour Court of South Africa
pertaining to the retrenchment process undertaken in terms of Section 189A of the LRA which was concluded in March
2015 ("March Retrenchment Process"). The matter was heard by the Court on April 14, 2015, and on April 24, 2015, the
LRA dismissed the application brought by AMCU with costs. AMCU has appealed the judgment and the appeal was heard
by the Labour Appeal Court on November 4, 2015. The outcome of this hearing is still pending.

On April 10, 2015, BC Dundee received notice that AMCU had referred a dispute to the Commission for Conciliation,
Mediation and Arbitration ("CCMA") in respect of the substantive fairness of the March Retrenchment Process, which
dispute was heard on May 18, 2015. The CCMA referred the matter to the Labour Court. AMCU had until August 17,
2015 to make a further application, however no submission was made before this deadline, and this matter is now
closed.

On April 20, 2015, the trustees of the Avemore Trust brought an application in the High Court of South Africa against,
among others, the South African Minister of Mineral Resources ("the Minister"), BC Dundee and Zinoju in respect of
Mining Right 174 ("MR174"). In terms of the application, the trustees of the Avemore Trust challenged the decision by
the Minister, subsequent to an internal appeal process concluded during September 2014, to grant a converted mining
right to BC Dundee and to grant consent for the cession of the converted mining right to Zinoju. There have been various
settlement offers between the parties, but should settlement not be reached, BC Dundee and Zinoju intend to oppose
the application. The Company's legal team, including senior counsel have advised of a defendable case in terms of
Avemore Trust's approach to the matter. The legal process on this matter is currently ongoing.

On August 27, 2015, notice was received from the Minister that Mining Right 301 ("MR301") had been withdrawn
together with the approval by the Regional Manager of the Environmental Management Plan in respect of MR301 (the
"Ministerial Decision"). The reasons given by the Minister for the Ministerial Decision are procedural issues in respect of
the award process, in relation to an objection received from Avemore Trust in October 2013 against the awarding of the
right. On September 15, 2015, a urgent court order was granted, pending final determination, for the Ministerial
Decision to be of no force and effect, to interdict the Minister from awarding MR301 to any other party and for the
Company to continue to mine in terms of MR301. A review application was instituted by the Company in October 2015
to obtain final relief in the form of an order setting aside the Ministerial Decision, and the Company's legal team,
including senior counsel have indicated a strong likelihood of the review application being successful. The legal process
on this matter is currently ongoing.

30 CHANGE IN DIRECTORS AND OFFICERS

On July 23, 2015, the Company announced the resignation of Ms. Lorraine Harrison as Corporate Secretary of BC Corp,
effective July 24, 2015. On that date, the Company appointed Ms. Sarah Williams as Corporate Secretary of BC Corp.

On September 1, 2015, the Company announced the appointments of Mr. Edward Scholtz and Mr. John Wallington to
the Board of Directors. The appointments of Mr. Scholtz and Mr. Wallington followed the resignations of Mr. John
Dreyer and Dr. Michael Price who stepped down as directors of the Company.

31 SUBSEQUENT EVENTS

Issuance of Share Capital

Subsequent to December 31, 2015, the Company issued additional shares to RCF in settlement of interest owing on the
RCF Convertible Loan for the period December 4, 2015 to December 31, 2015. An additional 14 990 400 Common Shares
were issued at C$0.05.

TSXV Delisting Review

The TSXV advised the Company that it had been placed on notice for transfer to the NEX Board of the TSXV ("NEX") for
failure to meet the public float continued listing requirements of the TSXV. NEX is a separate board of the TSXV and
provides a trading forum for listed companies that have fallen below the TSXV's ongoing listing standards.

Pursuant to the notice, the Company has until July 7, 2016 to provide satisfactory submissions on the issue. The
Company intends to work with the TSXV throughout the review period in an effort to restore compliance with TSXV
continued listing requirements.

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 30, 2016

Sponsor
Questco (Pty) Ltd

Date: 30/03/2016 04:00:00 Supplied by www.sharenet.co.za                     
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