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Buffalo Coal Corp - Consolidated Financial Statements For The Years Ended 31 December 2016 And 31 December 2105

Release Date: 28/03/2017 16:00:00      Code(s): BUC     
BUFFALO COAL CORP.
Registration number: 001891261
External company registration number: 2011/011661/10
Share code on the TSX Venture Exchange: BUF
Share code on the JSE Limited: BUC
ISIN: CA1194421014
("Buffalo Coal" or "the Company")

CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2016 and December 31, 2015
(Presented in South African Rands)

Consolidated Statements of Financial Position
(Presented in South African Rands)
                                                                      December 31,            December 31,            December 31,
                                                                              2016                    2015                    2016
                                                                                                                          (Note 2)
                                                     Notes                       R                       R                      C$   
Assets                                                                                                                               
Non-current assets                                                                                                                   
Property, plant and equipment                            9             311 730 638             340 649 540              30 497 841   
Investment in financial assets                          10              41 633 486              35 674 589               4 073 169   
Deferred tax asset                                      11                       -               1 743 492                       -   
Other receivables                                       12               4 032 570               4 099 242                 394 522   
Long-term restricted cash                               15              11 200 000              11 200 000               1 095 740   
Total non-current assets                                               368 596 694             393 366 863              36 061 272   
Current assets                                                                                                                       
Trade and other receivables                             12              84 773 344              75 581 681               8 293 715   
Inventories                                             13              35 222 250              42 225 872               3 445 932   
Non-interest-bearing receivables                        14               1 902 205               1 697 948                 186 100   
Taxation receivable                                     23                       -                  51 516                       -   
Cash and cash equivalents                               16              13 753 934              20 365 446               1 345 602   
Non-current assets held for sale                         9                       -              25 000 000                       -   
Total current assets                                                   135 651 733             164 922 463              13 271 349   
Total assets                                                           504 248 427             558 289 326              49 332 621   
Equity and liabilities                                                                                                               
Capital and reserves                                                                                                                 
Share capital                                           17           1 075 881 497           1 038 096 502             105 257 743   
Currency translation reserve                                         (219 945 085)           (219 945 085)            (21 518 098)   
Reserves                                                18              13 308 821              16 726 895               1 302 055   
Accumulated retained loss                                          (1 095 286 547)         (1 055 512 401)           (107 156 216)   
Equity (deficiency) attributable to owners of the                                                                                    
company                                                              (226 041 314)           (220 634 089)            (22 114 516)   
Non-controlling interest                                                 4 339 142               4 339 142                 424 515   
Total equity (deficiency)                                            (221 702 172)           (216 294 947)            (21 690 001)   
Non-current liabilities                                                                                                              
Borrowings                                              19                       -             143 535 994                       -   
Warrant liability                                       19                       -               2 144 609                       -   
RCF loan facilities                                     20             336 288 222             299 753 845              32 900 407   
Conversion option liability                             20              31 905 346             124 378 349               3 121 426   
Asset retirement obligation                             21              26 694 012              14 992 013               2 611 581   
Total non-current liabilities                                          394 887 580             584 804 810              38 633 414   
Current liabilities                                                                                                                  
Trade and other payables                                22             158 262 414             161 400 974              15 483 442   
Current Tax Liabilities                                 23               8 775 360                       -                 858 528   
Current portion of borrowings                           19             161 016 413              25 714 284              15 752 873   
Warrant liability                                       19                 344 627                       -                  33 716   
Current portion of asset retirement obligation          21               2 664 205               2 664 205                 260 650   
Current liabilities                                                    331 063 019             189 779 463              32 389 209   
Total liabilities                                                      725 950 599             774 584 273              71 022 623   
Total equity (deficiency) and liabilities                              504 248 427             558 289 326              49 332 621   

Commitments and contingencies                       1, 2.1, 27

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)

                                                                        Year Ended              Year Ended              Year Ended
                                                                      December 31,            December 31,            December 31,
                                                     Notes                    2016                    2015                    2016
                                                                                                                          (Note 2)   
                                                                                 R                       R                      C$   
Revenue                                                                660 581 569             630 999 455              64 627 308   
Cost of sales                                            5           (641 833 612)           (711 437 976)            (62 793 121)   
Gross profit/(loss)                                                     18 747 957            (80 438 521)               1 834 187   
Other income/(expense) - net                             6              76 998 108           (307 895 390)               7 533 030   
General and administration expenses                      5            (61 990 584)            (68 684 249)             (6 064 784)   
Profit/(loss) before the undernoted                                     33 755 481           (457 018 160)               3 302 433   
Finance income                                           7               1 547 684                 849 975                 151 416   
Finance expense                                          7            (72 672 258)            (90 300 915)             (7 109 814)   
Loss before income tax                                                (37 369 093)           (546 469 100)             (3 655 965)   
Income tax expense                                       8             (8 174 931)            (15 355 554)               (799 786)   
Loss and total comprehensive loss for the year                        (45 544 024)           (561 824 654)             (4 455 751)   
Loss attributable to:                                                                                                                
- Owners of the parent                                                (45 544 024)           (561 824 654)             (4 455 751)   
- Non-controlling interest                                                       -                       -                       -   
                                                                      (45 544 024)           (561 824 654)             (4 455 751)   
Net loss per share - basic and diluted                                      (0.14)                  (5.31)                  (0.01)   
Headline loss per share - basic and diluted                                 (0.12)                  (5.34)                  (0.01)   
Weighted average number of common shares outstanding:                                                                                
- Basic                                                                336 932 882             105 825 767             336 932 882   
- Diluted                                                              336 932 882             105 825 767             336 932 882   

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

Consolidated Statements of Changes in Equity
(Presented in South African Rands)

                                                                                            Attributable to owners of the Group
                                                                                                Reserves           
                                                                                             Equity-settled                                         Currency                                   
                                             No. of shares           Share                     non-employee    BEE option        Accumulated     translation                  Non-controlling                                                                                                   
                                   Notes            issued         capital   Option reserve        benefits       reserve      retained loss         reserve           Total         interest   Total equity 
                                                                         R                R               R             R                  R               R               R                R              R
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                      17       219 007 338      97 800 475                -               -             -                  -               -      97 800 475                -     97 800 475
Shares issued to management and
directors                             17         5 525 000       2 329 585                -               -             -                  -               -       2 329 585                -      2 329 585
Stock-based compensation              18                 -               -          799 149               -             -                  -               -         799 149                -        799 149
Stock options expired/cancelled                          -               -      (3 672 061)               -             -          3 672 061               -               -                -              -
Net loss for the year                                    -               -                -                             -      (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)
Shares issued in relation to RCF
Convertible Loan                      17        98 909 640      29 164 195                -               -             -                  -               -      29 164 195                -     29 164 195
Shares issued to STA                  17        15 164 333       8 620 800                -               -             -                  -               -       8 620 800                -      8 620 800
Stock-based compensation                                 -               -          176 514       2 175 290             -                  -               -       2 351 804                -      2 351 804
Stock options expired/cancelled       18                 -               -      (5 769 878)               -             -          5 769 878               -               -                -              -
Net loss for the year                                    -               -                -               -             -       (45 544 024)               -    (45 544 024)                -   (45 544 024)
Balance at December 31, 2016                   394 803 022   1 075 881 497        2 059 820       2 175 290     9 073 711    (1 095 286 547)   (219 945 085)   (226 041 314)        4 339 142  (221 702 172)

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

Consolidated Statements of Cash Flow
(Presented in South African Rands)

                                                                                      Year ended        Year ended      Year ended
                                                                           Notes    December 31,      December 31,    December 31,
                                                                                            2016              2015            2016
                                                                                                                          (Note 2)
                                                                                               R                 R              C$
Cash flows from operating activities
Cash generated from/(utilised in) operations                                  25      52 078 497      (51 483 895)       5 095 045
Interest received                                                                      1 547 684           849 975         151 416
Interest paid                                                                       (21 104 264)      (13 929 495)     (2 064 714)
Taxation (paid)/recovered                                                              (504 100)           681 627        (49 317)
Net cash generated from/(utilised in) operating activities                            32 017 817      (63 881 788)       3 132 430
Cash flows from investing activities
Investment in financial assets                                                       (5 145 187)       (4 888 554)       (503 374)
Purchase of property, plant and equipment                                           (21 084 772)      (55 981 105)     (2 062 807)
Proceeds from the disposal of property, plant and equipment                               58 688         5 528 509           5 742
Movement in non-interest bearing receivables                                           (204 258)         (110 183)        (19 983)
Net cash utilised in investing activities                                           (26 375 529)      (55 451 333)     (2 580 422)
Cash flows from financing activities
Proceeds from private placement                                                                -        28 705 063               -
Proceeds from RCF convertible loan                                                             -        74 395 051               -
Issuance costs related to the RCF convertible loan                                             -         (134 252)               -
Drawdowns from the revolving credit facility                                          25 000 000        41 632 006       2 445 850
Repayment of borrowings                                                             (37 253 800)      (17 019 382)     (3 644 688)
Net cash (utilised in)/generated from financing activities                          (12 253 800)       127 578 486     (1 198 838)
Net (decrease)/increase in cash and cash equivalents                                 (6 611 512)         8 245 365       (646 830)
Cash at the beginning of the year                                                     20 365 446        12 120 081       1 992 432
Cash at the end of the year                                                           13 753 934        20 365 446       1 345 602

Non-cash investing and financing transactions

Common shares issued in settlement of the interest owing
on the RCF loan facilities                                                            29 164 195        69 095 413       2 853 249
Common shares issued to STA                                                            8 620 800                 -         843 407
Common shares issued to management and directors                                               -         2 329 585               -
Proceeds from the disposal of property, plant and
equipment to settle trade payables                                                             -      (18 000 000)               -
Change in working capital related to property, plant and
equipment                                                                             25 000 000         7 512 548       2 445 849
Total                                                                                 62 784 995        60 937 546       6 142 504

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

Notes to the Consolidated Financial Statements
For the years ended December 31, 2016 and December 31, 2015
(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. The Company is listed on the TSX Venture Exchange
("TSXV") and the Alternative Exchange ("AltX") operated by the JSE Limited ("JSE"). As at financial year end December
31, 2016, Resource Capital Fund V L.P. ("RCF") owned 347 945 097 common shares of the Company ("Common Shares")
representing approximately 88.1% 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 authorised
for issue by the Board of Directors on March 24, 2017.

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 judgement in the process of applying the accounting policies of the Group.
The areas involving a higher degree of judgement 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 realise its
assets and discharge its liabilities in the normal course of operations. Market conditions deteriorated significantly over
the prior financial years necessitating, during the financial year ended December 31, 2015, necessitating the
implementation of various restructurings at BC Dundee including two retrenchment processes and 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 ("STA Contract Mining Agreement"), the sale of certain
underground mining equipment to STA and an equity settlement arrangement ("STA Equity Settlement Agreement") in
terms of which a portion of the contract mining fees will be settled through the issuance of common shares of the
Company ("Common Shares"), in order to alleviate cash flow pressures. In addition, the Company secured additional
funding from Resource Capital Fund V L.P. ("RCF") and Investec Bank Limited ("Investec") in December 2015, of which
the last tranche was drawn in March 2016. During 2016, the Group entered into contracts with a significant export
customer for the sale of built-up anthracite stockpiles at market-related pricing, which has and will inject cash into the
Group. Although the Group has implemented various restructuring initiatives, the Group continues to experience
operational challenges. The Group remains dependent upon sustaining profitable levels of operation, as well as the
continued support of Investec, RCF and other stakeholders and believes that 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, 2016, the Company had a shareholders' deficiency and a working capital deficiency, and for the year
ended December 31, 2016, had a loss of R45.5 million. The Group was in breach of certain covenants with respect to its
borrowings from Investec (note 19). On November 22, 2016, Investec provided a forbearance letter stating that it does
not intend to exercise its rights to request early payment of the outstanding debt; however, no covenant waiver has
been provided and Investec has reserved its right to review this decision periodically, with no obligation to keep the
Company advised in this regard. There is no assurance that the Company will be able to meet its covenants in the future,
or that Investec will provide future waivers, if required. 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.

References to "R", "Rands" mean South African Rands, "C$" mean Canadian Dollars and "US$" 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, 2016 and the financial results for the year ended December 31, 2016 were translated into Canadian
Dollars using a convenience translation at the rate of C$1:R10.2214, which is the exchange rate published on
Oanda.com as of December 31, 2016. 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, realised 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, 2016 financial year-end:

IFRS 10 - 'Consolidated Financial Statements' and IAS 28 - 'Investment in Associates and Joint Ventures'.
The amendments clarify that the exemption from preparing consolidated financial statements is available to a parent
entity that is a subsidiary of an investment entity, even if the investment entity measures all its subsidiaries at fair value
in accordance with IFRS 10. Consequential amendments have also been made to IAS 28 to clarify that the exemption
from applying the equity method is also applicable to an investor in an associate or joint venture if that investor is a
subsidiary of an investment entity that measures all its subsidiaries at fair value.

The amendments further clarify that the requirement for an investment entity to consolidate a subsidiary providing
services related to the former's investment activities applies only to subsidiaries that are not investment entities
themselves.

Moreover, the amendments clarify that in applying the equity method of accounting to an associate or a joint venture
that is an investment entity, an investor may retain the fair value measurements that the associate or joint venture used
for its subsidiaries. This amendment has not had a significant impact on the Group.

IFRS 11 - 'Joint Arrangements'
The amendments provide guidance on how to account for the acquisition of an interest in a joint operation in which the
activities constitute a business as defined in IFRS 3 Business Combinations. Specifically the amendments state that the
relevant principles on accounting for business combinations in IFRS 3 and other standards (IAS 12 and IAS 36) should be
applied. This amendment has not had a significant impact on the Group.

IAS 1 - 'Presentation of Financial Statements'
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.
This amendment has not had a significant impact on the Group.

IAS 27 - 'Separate Financial Statements'
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. This amendment has not had a
significant impact on the Group.

Amendments to IAS 16 - 'Property, Plant and Equipment', and IAS 38 - 'Intangible Assets' - Clarification of Acceptable
Methods of Depreciation and Amortisation
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 amortisation 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. This amendment has not had a significant impact on
the Group.

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.

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.

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 amendments to IFRS 5, IFRS 7, IAS 19 and IAS 34 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, 2016
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 their 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 recognised financial assets that are within the scope of IAS 39, Financial Instruments: Recognition and Measurement
are required to be subsequently measured at amortised 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 recognised 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 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 recognise 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 recognises 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.

IFRS 16 - 'Leases' - effective January 1, 2019
IFRS 16 introduces a comprehensive model for the identification of lease arrangements and accounting treatments for
both lessors and lessees. It will supersede the current lease guidance including IAS 17 Leases and the related
interpretations when it becomes effective.

IFRS 16 distinguishes leases and service contracts on the basis of whether an identified asset is controlled by a customer.
Distinctions of operating leases (off balance sheet) and finance leases (on balance sheet) are removed for lessee
accounting and is replaced by a model where a right-of-use asset and a corresponding liability have to be recognised for
all leases by lessees except for short-term lessees and leases of low value assets.

The right-of-use asset is initially measured at cost and subsequently measured at cost less accumulated depreciation and
impairment losses, adjusted for any remeasurement of the lease liability. The lease liability is initially measured at the
present value of the lease payments. Subsequently, the lease liability is adjusted for interest and lease payments, as well
as the impact of lease modifications, amongst others. Furthermore, the classification of cash flows will also be affected
as operating lease payments under IAS 17 are presented as operating cash flows; whereas under the IFRS 16 model, the
lease payments will be split into a principal and interest portion which will be presented as financing and operating cash
flows respectively. It is not practicable to provide a reasonable estimate of the effect of IFRS 16 until the Group
undertakes a detailed review.

IAS 7 - Disclosure Initiative - effective January 1, 2017
The amendments require an entity to provide disclosures that enable users of financial statements to evaluate changes
in liabilities arising from financing activities. The Group does not anticipate that the application of these amendments
will have a significant impact on the Group's consolidated financial statements.

IAS 12 - Recognition of Deferred Tax Assets for unrealised losses - effective January 1, 2017
The amendments were issued to clarify the requirements for recognising deferred tax assets on unrealised losses. The
amendments clarify the accounting for deferred tax where an asset is measured at fair value and that fair value is below
the asset's tax base. They also clarify certain other aspects of accounting for deferred tax assets.

The amendments clarify the existing guidance under IAS 12. They do not change the underlying principles for the
recognition of deferred tax assets. The Group does not anticipate that the application of these amendments will have a
significant impact on the Group's consolidated financial statements.

IFRIC 22 - Foreign Currency Transactions and Advance Consideration - effective January 1, 2018
IFRIC 22 was issued in December 2016 and addresses foreign currency transactions or parts of transactions where there
is consideration that is denominated in a foreign currency; a prepaid asset or deferred income liability is recognised in
respect of that consideration, in advance of the recognition of the related asset, expense or income; and the prepaid
asset or deferred income liability is non-monetary. The interpretation committee concluded that the date of the
transaction, for purposes of determining the exchange rate, is the date of initial recognition of the non-monetary
prepaid asset or deferred income liability. Earlier adoption is permitted.

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 recognises 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 recognised 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 recognised 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
recognised 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 recognised 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 recognised 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 recognised 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 recognised 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 recognised 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 recognised 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 recognised in OCI is reclassified to profit or loss where appropriate.

2.4 Segment reporting

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

2.5 Foreign currency translation

(a) Functional and presentation currency

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

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in profit or loss. Foreign exchange gains and losses are
presented in profit or loss within "other income/(expense) - 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 recognised 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 tonnes 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 to 20 years
Development costs                                               5 to 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 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 capitalised 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.

2.8 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 recognised 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 recognised for the asset (cash-generating unit) in prior years. A
reversal of an impairment loss is recognised immediately in profit or loss, unless it relates to goodwill, in which case it is
not reversed.

2.9 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.

2.10 Financial instruments

2.10.1 Financial assets

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

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

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorised 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 recognised 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 recognised
at fair value, and transaction costs are expensed in profit or loss. Loans and receivables are initially carried at fair value
and subsequently at amortised cost using the effective interest rate method.

Financial assets are derecognised 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 income/(expense) - 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 amortised cost, the amount of the impairment loss recognised is the difference between
the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's
original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for
all financial assets with the exception of trade receivables (Refer to note 2.12).

(e) Derecognition

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

2.10.2 Financial liabilities

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

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

2.10.3 Compound financial instruments

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

At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for
similar non-convertible instruments. This amount is recorded as a liability on an amortised 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 recognised 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 recognised in equity will be transferred to issued capital.
When the conversion option remains unexercised at the maturity date of the convertible note, the balance recognised in
equity will be transferred to retained earnings/loss.

No gain or loss is recognised 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 recognised
directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability
component and are amortised over the lives of the convertible loans using the effective interest rate method.

2.10.4 Derivative financial instruments

Derivatives are initially recognised at fair value on the date the derivative contract is entered into and are subsequently
remeasured at their fair value. The method of recognising 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 recognised
immediately in profit or loss within 'other income/(expense) - net'.

2.11 Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the
extent that it relates to items recognised directly in equity. In this case, the tax is recognised 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 recognised, 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 recognised 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 realised or
the deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it is
probable that future taxable profit will be available against which the temporary differences can be utilised.

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

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

2.12 Trade and other receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised 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 recognised in profit or loss within 'operating expenses'. Significant financial difficulties of the
debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in
payments are considered indicators that the trade receivable is impaired. When a trade receivable is uncollectible, it is
written off against the provision. Subsequent recoveries of amounts previously written off are credited against
'operating expenses' in profit or loss.

2.13 Inventories

Inventories are stated at the lower of cost or net realisable 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 realisable value is the
estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.14 Cash and cash equivalents

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

2.15 Share-based payments

The Group operates an equity-settled, share-based compensation plan, under which the entity receives services from
employees and consultants as consideration for equity instruments (options) of the Group. The fair value of the
employee and consulting services received in exchange for the grant of the options is recognised as an expense. The
total amount to be expensed is determined by reference to the fair value of the options granted and is recognised 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 recognises 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 recognised 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 recognises
the impact of the revision to original estimates in profit or loss, with a corresponding adjustment to equity.

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

2.16 Trade and other payables

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

2.17 Provisions

Provisions are recognised 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 recognised 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 recognised 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 capitalised as part of the assets' carrying value and amortised over the assets' estimated useful lives.

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

2.18 Revenue recognition

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

The Group recognises 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 recognised 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 recognised 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 recognised using the original effective interest rate.

(c) Other income

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

2.19 Employee benefits

(a) Defined contribution plans

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The
Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to
pay all employees the benefits relating to employee service in the current and prior periods. The contributions are
recognised as an employee benefit expense when they are due. Prepaid contributions are recognised 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 recognised in the period in
which the service is rendered and are not discounted.

2.20 Borrowings

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

Fees paid on the establishment of loan facilities are recognised 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
capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

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

2.21 Loss per share

Basic loss per common share has been computed by dividing the loss applicable to common shareholders by the
weighted average number of common shares outstanding during the representative period. Diluted loss per common
share is determined under the assumption that deemed proceeds on the exercise of stock options and other dilutive
instruments are considered to be used to reacquire common shares at the average price for the period with the
incremental number of shares being included in the denominator of the diluted loss per share calculation. The diluted
loss per share calculation excludes any potential conversion of options and warrants that would decrease loss per share.
As at December 31, 2016, outstanding options, loans and warrants, as well as the potential shares issuable with regards
to the RCF Convertible Loan, referred to in note 20, 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 R4.0 million (period ended December 31, 2015: loss of R3.6 million).

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. 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, 2016, a 10% increase/(decrease) in the year average foreign exchange rate between the Canadian
Dollar and the Rand would have increased/(decreased) the Group's profit or loss by approximately R3.5 million (period
ended December 31, 2015: R13.4 million).

A 10% increase/(decrease) in the year end foreign exchange rate between the US Dollar and the Rand would have
increased/(decreased) the Group's profit or loss by approximately R36.4 million (period ended December 31, 2015:
R41.1 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, 2016, a 10% change in the API 4 coal price index would have resulted in a corresponding change in
export coal revenue of approximately R2.1 million (year ended December 31, 2015: R18.5 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 (year ended December 31, 2015: 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 to notes 12 and 27,
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 utilisation of credit limits is regularly monitored. No credit limits were exceeded during the reporting
period, and management does not expect any losses from non-performance by these counterparties.

Restricted cash totalling R11.2 million was on deposit with First National Bank ("FNB") to be released to the relevant
counterparties if payments are not made to them (note 15).

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      Greater than 
                                                                       Not later than 1 year              5 years           5 years
At December 31, 2016
Borrowings                                                                       178 541 211                    -                 -
RCF loan facilities                                                                        -          370 958 400                 -
Trade and other payables                                                         158 262 414                    -                 -
At December 31, 2015
Borrowings                                                                        25 714 284          164 977 422                 -
RCF loan facilities                                                                        -          419 631 300                 -
Trade and other payables                                                         161 400 974                    -                 -

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, 2016 and December 31, 2015 were as follows:

                                                                                                   December 31,        December 31,
                                                                                                           2016                2015
Total borrowings                                                                                    529 554 608         595 527 082
Less: Cash and cash equivalents                                                                    (13 753 934)        (20 365 446)
Net debt                                                                                            515 800 674         575 161 636
Total equity                                                                                      (221 702 172)       (216 294 947)
Total capital                                                                                       294 098 502         358 866 689
Gearing ratio (net debt/total capital)                                                                     175%                160%

Included within total borrowings is a convertible loan of R371.0 million (year ended December 31, 2015: R419.6 million).
The Company's capital management objectives, policies and processes have remained unchanged during the year ended
December 31, 2016 except for the Investec loan as discussed in note 19 and the RCF loan facilities as discussed in note 20.

The Company is not subject to any externally imposed capital requirements with the exceptions as discussed in note 19
and 20, 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, 2016, 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,
2016 and December 31, 2015:

                                                                                            Level 1          Level 2        Level 3
                                                                                                  R                R              R
December 31, 2016
Investment in financial assets                                                           41 633 486                -              -
Conversion option liability                                                                       -       31 905 346              -
Warrant liability                                                                                 -          344 627              -
December 31, 2015
Investment in financial assets                                                           35 674 589                -              -
Conversion option liability                                                                       -      124 378 349              -
Warrant liability                                                                                 -        2 144 609              -

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of the consolidated financial statements in conformity with IFRS requires the Group's management to
make judgements, 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 judgements, estimates and assumptions in
determining the carrying values and amounts include, but are not limited to:

4.1 Provisions

Significant judgement and use of assumptions is required in determining the Group's provisions. Management uses its
best estimates based on current knowledge in determining the amount to be recognised as a provision. Key assumptions
utilised 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, 2016, based on management's estimate of the recoverable amount of the BC Dundee Group
properties, no impairment was recorded. If the discount rate had been 1% higher than management's estimates, or if
the foreign exchange rate between the Rand and the US Dollar had been 5% higher than management's estimates, the
Group would still not have recognised any impairment at December 31, 2016. An impairment loss of R137.9 million was
recorded at December 31, 2015 as a result of management's review, which resulted in the write-down of property, plant
and equipment.

4.3 Taxes and recoverability of potential deferred tax assets

The Company is subject to income, value added, withholding and other taxes in various jurisdictions. Significant
judgement 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 recognises
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 realising deferred tax assets recognised, 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.

4.4 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 judgement used in applying valuation techniques. These assumptions
and judgements 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 judgements and
assumptions are inherently uncertain. Changes in these assumptions could materially affect the fair value estimates.

4.5 Compound financial instruments

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

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

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

4.6 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 judgements 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.

4.7 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 realise 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 (refer to note 2.1).

4.8 Contingencies

Refer to note 27.

5 NATURE OF EXPENSES
                                                                                                             Year ended
                                                                                               December 31, 2016  December 31, 2015
Raw materials and consumables                                                                         18 518 324         36 150 641
Changes in inventories                                                                                92 882 339         91 725 841
Mining overheads                                                                                       5 065 216         34 635 128
Mining sub-contractors                                                                               215 983 927        129 069 003
Depreciation and amortisation                                                                         57 025 517         76 151 497
Repairs and maintenance                                                                               51 608 002         70 413 498
Salaries and wages                                                                                   161 231 956        197 831 865
Social development expenditure                                                                         7 715 537          4 048 699
Royalty tax expense                                                                                    5 780 092          6 440 722
Bad debts written off                                                                                        881                  -
Auditors' remuneration                                                                                 3 331 973          2 738 365
Transport costs - internal                                                                            31 393 436         39 668 965
Railage, handling and wharfage                                                                        19 397 837         54 461 610
Legal, consulting and other professional fees                                                         10 948 443         16 558 337
Shareholder communication and listing fees                                                             1 178 900          2 529 961
Stock-based compensation                                                                                 176 514            799 149
Other expenses                                                                                        21 585 302         16 898 944
Total                                                                                                703 824 196        780 122 225
Cost of sales                                                                                        641 833 612        711 437 976
General and administration expenses                                                                   61 990 584         68 684 249
Total                                                                                                703 824 196        780 122 225

6 OTHER INCOME /(EXPENSE) - NET
                                                                                                            Year ended
                                                                                              December 31, 2016   December 31, 2015
Foreign exchange gain/(loss) - net                                                                   36 740 256        (66 912 407)
Impairment of goodwill, intangible assets and property, plant and
equipment                                                                                                     -       (137 889 236)
Loss on remeasurement of non-current assets held for sale                                                     -        (10 833 333)
Net loss on disposal of property, plant and equipment                                               (4 008 157)         (3 602 813)
Scrap sales                                                                                             188 392             453 705
Insurance proceeds                                                                                      206 177           4 211 595
Fair value adjustment on financial assets                                                               878 220           1 668 921
Unrealised marked-to-market loss on securities                                                         (59 215)            (31 729)
Sundry recoveries                                                                                     2 650 662                   -
Fair value adjustment on conversion option and warrant liability                                     92 543 617         100 588 904
Loss on extinguishment of debt (note 20)                                                           (50 647 288)       (195 880 122)
Penalties                                                                                           (1 517 752)                   -
Other income                                                                                             23 196             331 125
Total                                                                                                76 998 108       (307 895 390)

Impairment loss

No impairment loss was recognised for the year ended December 31, 2016. The impairment loss of R137.9 million
recognised during the year ended December 31, 2015, 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 categorised as level 3 in terms of the fair value hierarchy. A significant portion of the inputs
into the model were unobservable, as defined, and were based on Company specific assumptions. The key assumptions
used in the pre-tax cash flow projection are as follows: estimates of future production based on a LOM model,
assuming that all production is sold and using forecast macro assumptions, 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.

There was no change in the valuation techniques during the year ended December 31, 2016.

There was significant estimation and judgement used when performing the fair value calculations (note 4.2 and 4.6). The
key assumptions used in the fair value less costs to sell calculations as at December 31, 2016, December 31, 2015 and
September 30, 2015 are as follows:

                                                                        December 31, 2016   December 31, 2015    September 30, 2015
Pre-tax discount rate                                                              12.25%              12.10%                13.32%
Gross fair value                                                           R400.7 million      R416.9 million        R422.9 million
Costs to sell                                                                R8.0 million        R8.3 million          R8.5 million
Recoverable amount                                                         R392.7 million      R408.6 million        R414.5 million

7 FINANCE INCOME AND EXPENSE
                                                                                                         Year ended
                                                                                           December 31, 2016      December 31, 2015
Finance income
Cash and restricted cash                                                                           1 547 684                849 975
Total                                                                                              1 547 684                849 975
Finance expense
Interest on borrowings                                                                          (20 907 639)           (14 790 356)
Interest on the RCF loan facilities                                                             (21 544 901)           (51 581 960)
Interest on STA short-term loan                                                                  (1 620 005)              (600 698)
Interest to South African Revenue Service ("SARS")                                               (2 286 451)                    -
Unwinding discount on asset retirement obligation                                                (1 076 979)              (508 237)
Loan accretion                                                                                  (22 689 496)           (20 220 933)
Other                                                                                            (2 546 787)            (2 598 731)
Total                                                                                           (72 672 258)           (90 300 915)

8 INCOME TAX

Income tax expense is comprised as follows:
                                                                                                         Year ended
                                                                                           December 31, 2016      December 31, 2015
Current tax:
Current tax on profits - South Africa                                                            (3 035 504)            (1 603 458)
Withholding tax - Canada                                                                         (3 395 935)                      -
Deferred taxes - current year timing differences                                                 (1 743 492)           (13 752 096)
Income tax expense                                                                               (8 174 931)           (15 355 554)

The major items causing the Company's income tax expense to differ from the South African statutory rate of 28% (year
ended December 31, 2015: 28%) are as follows:

Loss before income taxes                                                                        (37 369 093)          (546 469 100)
Expected tax benefit at statutory tax rates                                                       10 463 346            153 011 348                                                                                               
Adjustments resulting from:
Benefits of tax losses not recognised                                                           (20 311 242)          (180 885 346)
Income not subject to tax                                                                          1 685 614              1 836 093  
Permanent differences                                                                            (1 242 428)            (1 392 915)                                
Foreign tax rate differential                                                                      (395 458)            (2 766 412)  
Other temporary differences                                                                        1 625 237             14 841 678
Income tax expense                                                                               (8 174 931)           (15 355 554)
                                                                                               
9 PROPERTY, PLANT AND EQUIPMENT
                                                                        Office
                                                                    equipment,      Development
                                      Land and                    fixtures and            costs
                                     buildings   Mining assets        fittings      capitalised    Mineral rights             Total
Year ended December 31, 2016
Opening net book value               6 495 900     240 150 717       1 517 618       62 286 748        30 198 557       340 649 540
Additions                              382 586      12 642 312         132 462        7 927 410                 -        21 084 770
Change in asset retirement
obligation                                   -      11 088 687               -                -                 -        11 088 687
Disposals                                    -     (4 066 841)               -                -                 -       (4 066 841)
Depreciation                         (531 863)    (47 590 360)       (598 777)      (6 288 076)       (2 016 442)      (57 025 518)
Net book value at end of year        6 346 623     212 224 515       1 051 303       63 926 082        28 182 115       311 730 638
Year ended December 31, 2016
Cost                                10 078 055     546 095 456       7 785 907       83 696 591       328 943 756       976 599 764
Accumulated depreciation           (3 731 432)   (333 870 941)     (6 734 603)     (19 770 509)     (300 761 642)     (664 869 126)
Net book value at end of year        6 346 623     212 224 515       1 051 303       63 926 082        28 182 115       311 730 638

                                                                         Office
                                                                     equipment,     Development
                                       Land and                    fixtures and           costs
                                      buildings    Mining assets       fittings     capitalised    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 includes items to the value of R0.1 million (year ended December 31, 2015: R0.1 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 R56.1 million
(year ended December 31, 2015: R76.2 million) was recognised in 'cost of sales'.

No impairment loss was recognised for the year ended December 31, 2016. The impairment loss of R137.9 million
recognised during the year ended December 31, 2015, 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, 2016      December 31, 2015
Opening balance                                                                                   25 000 000                      -
Transfer from property, plant and equipment                                                                -             43 000 000
Disposals                                                                                       (25 000 000)           (18 000 000)
Closing balance                                                                                           -              25 000 000

The non-current assets held for sale comprised 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 first continuous miner was disposed of
during the year ended December 31, 2015 for R18.0 million, with the second continuous miner being disposed of during
the year ended December 31, 2016 for R25.0 million.

10 INVESTMENT IN FINANCIAL ASSETS

                                                                                          December 31, 2016       December 31, 2015
Long-term investments                                                                            41 547 927              35 524 519
Security investments                                                                                 85 559                 150 070
Total                                                                                            41 633 486              35 674 589

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

                                                                                              December 31, 2016   December 31, 2015
Opening balance                                                                                      35 674 589          29 134 182
Current year contributions                                                                            5 145 187           4 888 554
Fair value adjustment                                                                                   878 220           1 668 921
Unrealised marked-to-market gain on securities                                                         (58 200)            (31 269)
Effect of foreign currency exchange difference                                                          (6 310)              14 201
Closing balance                                                                                      41 633 486          35 674 589

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 income/(expense) - net' within profit or
loss.

11 DEFERRED TAX

South Africa                                                                              December 31, 2016       December 31, 2015
Deferred income tax liabilities:
At beginning of year                                                                                      -            (44 737 339)
Current year timing differences                                                                           -              44 737 339
At end of year                                                                                            -                       -
Deferred tax asset:
At beginning of year                                                                              1 743 491              60 232 927
Current year timing differences                                                                   9 189 706              82 770 367
Unrecognised deferred tax asset                                                                 (6 273 598)           (140 136 695)
Write off of deferred tax asset                                                                 (4 659 599)                       -
Utilisation of assessed loss                                                                              -             (1 123 107)
At end of year                                                                                            -               1 743 492
Deferred tax asset/(liability) - net                                                                      -               1 743 492

The above balance is comprised of the following:

South Africa                                                                                 December 31, 2016    December 31, 2015
Provisions                                                                                           7 239 149            6 276 518
Tax losses                                                                                          31 798 406           31 596 136
Property, plant and equipment and other long-term assets                                          (39 037 555)         (36 061 299)
Other                                                                                                        -             (67 863)
At end of year                                                                                               -            1 743 492

Canada                                                                                     December 31, 2016      December 31, 2015
Deferred income tax liabilities:
At beginning of year                                                                             (1 683 380)            (9 458 273)
Current year timing differences                                                                    (751 313)              7 774 893
At end of year                                                                                   (2 434 693)            (1 683 380)
Deferred tax asset:
At beginning of year                                                                               1 683 380              9 458 273
Current year timing differences                                                                      751 313            (7 774 893)
At end of year                                                                                     2 434 693              1 683 380
Deferred tax asset/(liability) - net                                                                       -                      -

The above balance is comprised of the following:

Canada                                                                                        December 31, 2016   December 31, 2015
Tax losses                                                                                            2 434 693           1 683 380
Other                                                                                               (2 434 693)         (1 683 380)
At end of year                                                                                                -                   -

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

Canada                                                                                     December 31, 2016      December 31, 2015
Tax losses (expiring between 2027 and 2036)                                                      275 220 335            284 148 107
Other                                                                                             49 510 269             61 130 836
Total                                                                                            324 730 604            345 278 943
Total C$                                                                                          31 769 680             30 814 170

As at December 31, 2016, the Company had an unrecognised deferred tax asset of approximately R345.0 million (year
ended December 31, 2015: R480.0 million) relating to investments in subsidiaries that has not been recognised 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.

12 TRADE AND OTHER RECEIVABLES
                                                                                           December 31, 2016      December 31, 2015
Non-current other receivables:
- Deposits                                                                                         4 032 570              4 099 242
Total non-current other receivables                                                                4 032 570              4 099 242
Current trade and other receivables:
- Trade receivables                                                                               75 461 285             66 217 129
  Less: Provision for impairment of receivables                                                    (596 094)              (969 478)
- Trade receivables - net                                                                         74 865 191             65 247 651
- Value-Added Tax (VAT)                                                                            6 039 208              5 497 824
- Prepayments                                                                                      3 460 892              3 948 987
- Harmonised Sales Tax (HST)                                                                         124 579                257 006
- Other receivables                                                                                  283 474                630 213
Total current trade and other receivables                                                         84 773 344             75 581 681

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, 2016      December 31, 2015
Canadian Dollars                                                                                     124 579                593 609
United States Dollars                                                                              6 977 173             15 202 423
Rands                                                                                             77 671 592             59 785 649
Total                                                                                             84 773 344             75 581 681

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

                                                                                              December 31, 2016   December 31, 2015
Opening balance                                                                                         969 478             969 478
Provision (released)/raised, net                                                                      (373 384)                   -
Closing balance                                                                                         596 094             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.

13 INVENTORIES
                                                                                           December 31, 2016      December 31, 2015
Consumables                                                                                        2 547 765              1 934 854
Work in progress                                                                                     233 772              3 466 633
Finished goods                                                                                    32 440 713             36 824 385
Total                                                                                             35 222 250             42 225 872

Depreciation of R0.4 million (period ended December 31, 2015: R0.3 million) is included within inventory at December
31, 2016. The amount of inventories recognised as an expense during financial year ended December 31, 2016 is R371.1
million (period ended December 31, 2015: R601.2 million).

14 NON-INTEREST BEARING RECEIVABLES
                                                                                           December 31, 2016      December 31, 2015
Other                                                                                              1 902 205              1 697 948

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

15 RESTRICTED CASH

Restricted cash comprises of deposits with FNB of R3.2 million (year ended December 31, 2015: R3.2 million) in respect
of guarantees provided to the Department of Mineral Resources ("DMR") and Eskom, and R8.0 million (year ended
December 31, 2015: R8.0 million) in respect of guarantees provided to Transnet Freight Rail ("TFR").

16 CASH AND CASH EQUIVALENTS
                                                                                           December 31, 2016      December 31, 2015
Cash in bank                                                                                       5 542 930             20 365 446
Cash is denominated in the following currencies:
Canadian Dollars                                                                                   1 272 694                318 563
United States Dollars                                                                                 78 679              3 456 661
Rands                                                                                              5 542 929             16 590 222
Total                                                                                              6 894 303             20 365 446

17 SHARE CAPITAL

                                                                                             Number of shares          Stated value
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
Shares issued in relation to RCF Convertible Loan                                                  98 909 640            29 164 195
Shares issued to STA                                                                               15 164 333             8 620 800
Balance at December 31, 2016                                                                      394 803 022         1 075 881 497

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

As set out in further detail in note 20, the Company has raised an aggregate US$29 million convertible loan from RCF, of
which US$27 million is currently outstanding, 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, 2016:

- The Company issued 14 990 400 Common Shares to RCF based on an agreed share price of C$0.05 to settle
  interest on the RCF Convertible Loan for the period between December 1, 2015 and December 31, 2015. These
  shares were valued at C$0.03 based on the market price of these shares on date of issue.
- The Company issued 42 009 840 Common Shares to RCF based on an agreed share price of C$0.05 to settle
  interest on the RCF Convertible Loan for the period between January 1, 2016 and March 31, 2016. These shares
  were valued at C$0.03 based on the market price of these shares on date of issue.
- The Company issued 41 909 400 Common Shares to RCF based on an agreed share price of C$0.05 to settle
  interest on the RCF Convertible Loan for the period between April 1, 2016 and June 30, 2016. These shares were
  valued at C$0.02 based on the market price of these shares on date of issue.

During the period 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 year ended December 31, 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. Also during the year ended December 31, 2015, given the 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"). 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.

As set out in note 2, the arrangement with STA includes an equity settlement arrangement in terms of which a portion of
the contract mining fees will be settled in Common Shares, in order to alleviate cash flow pressures.

During the financial year ended December 31, 2016:

- The Company issued 6 136 353 Common Shares to STA based on an agreed share price of C$0.05 to settle a
  portion of the contract mining fees for the period between November 1, 2015 and March 31, 2016. These
  shares were valued at C$0.02 based on the market price of these shares on date of issue.
- The Company issued 4 459 284 Common Shares to STA based on an agreed share price of C$0.05 to settle a
  portion of the contract mining fees for the period between April 1, 2016 and June 30, 2016. These shares were
  valued at C$0.02 based on the market price of these shares on date of issue.
- The Company issued 4 568 696 Common Shares to STA based on an agreed share price of C$0.05 to settle a
  portion of the contract mining fees for the period between July 1, 2016 and September 30, 2016. These shares
  were valued at C$0.02 based on the market price of these shares on date of issue.

18 RESERVES
                                                                                              Weighted average
                                                                     Number of options     exercise price (C$)     Value of options
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
Granted and vested                                                             600 000                    0.05              317 005
Expired/cancelled                                                          (3 090 745)                    0.38          (5 910 369)
Closing balance at December 31, 2016                                         3 373 303                    0.12            2 059 820

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 on December 18, 2015. The plan was
ratified by shareholders at the annual general meeting of the Company on June 28, 2016.

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, officers,
employees and consultants of the Company may be granted options to purchase Common Shares at an exercise price
determined by the Board of Directors, but which shall not be lower than the 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 August 26, 2016, 600 000 share options were granted to employees of the Company with one third vesting
immediately. The balance will vest equally on August 26, 2017 and 2018 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 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.

An amount of R0.2 million (year ended December 31, 2015: R0.8 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 year 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, 2016       December 31, 2015
March 24, 2011                                                                 4.10                       -                  75 000
June 13, 2011                                                                  2.77                       -                 150 000
January 25, 2012                                                               1.80                  30 000                 100 000
August 13, 2013                                                                0.29                 638 000               1 236 000
August 12, 2014                                                                0.11                 250 000                 250 000
April 20, 2015                                                                 0.07               1 880 303               3 803 048
November 10, 2015                                                              0.04                 125 000                 250 000
August 26, 2016(1)                                                             0.05                 450 000                       -
Total                                                                                             3 373 303               5 864 048

(1) 600 000 share options vested on August 26, 2016, however, 150 000 share options were forfeit prior to the year ended
    December 31, 2016.

The weighted average remaining contractual life on share options outstanding at December 31, 2016 is 3.11 years
(December 31, 2015: 3.74 years). Of the 3 373 303 options outstanding at December 31, 2016 (December 31, 2015:
5 864 048), 2 554 873 options (December 31, 2015: 3 078 689) were exercisable.

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

Valuation details
Grant date                                                    August 26, 2016          November 10, 2015             April 20, 2015
Fair value (R)                                                         26 340                     78 077                  1 235 235
Option strike price (C$)                                                 0.05                       0.04                       0.07
Share price on grant date (C$)                                           0.02                       0.05                       0.06
Expiry date                                                   August 26, 2021          November 10, 2020             April 20, 2020
Remaining contractual life at year-end                                   4.66                       4.87                       4.31
Valuation assumptions:
Expected volatility (%)                                                    62                         75                         62
Expected life of grant (years)                                              5                          5                          5
Annual risk-free interest rate (%)                                       0.63                       0.82                       0.98
Expected dividend yield (%)                                                 -                          -                          -

Restricted Share Units

The Company has a RSU Incentive Plan in place in terms of which the Company is authorised 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, 2016 and
December 31, 2015, no RSUs were granted.

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'.

19 BORROWINGS

Borrowings consist of the Investec loan facilities as detailed below:

                                                                                             December 31, 2016    December 31, 2015
Investec loan facilities                                                                           161 016 413          169 250 278
Current portion                                                                                  (161 016 413)         (25 714 284)
Long-term portion                                                                                            -          143 535 994

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 amortising 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 2015;
- 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 to Investec's satisfaction and
R25.0 million was drawn by BC Dundee 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.

Due to continued cash constraints, Investec was approached during the first quarter of 2016 for a deferral of the term
loan facility repayment due on March 31, 2016. On March 31, 2016, BC Dundee entered into a fourth amendment to
the Investec term loan and revolving credit agreement ("Fourth Amendment") in terms of which the repayment
schedule for the term loan facility was replaced with a new schedule with principal repayments commencing on June 30, 2016.

In addition, surplus cash at quarter-end in excess of R30.0 million will be used to reduce the R80.0 million working
capital facility back to R30.0 million and a clause was included restricting outflows of funds from BC Dundee to BC Corp
between April 1, 2016 and June 30, 2016, unless prior written consent was obtained from Investec.

Investec was again approached for a deferral of the term loan facility repayment due on June 30, 2016. On
June 30, 2016, BC Dundee entered into a fifth amendment to the term loan and revolving credit agreement ("Fifth
Amendment") in terms of which the repayment schedule for the term loan facility was replaced with a new schedule
with principal repayments commencing on September 30, 2016. Investec extended the restriction on the outflows of
funds from BC Dundee to BC Corp to September 30, 2016, unless prior written consent was obtained from Investec. To
date, no cash has been swept to reduce the working capital facility.

On September 30, 2016 and December 31, 2016 the Company made the term loan facility repayments of R7.5 million.

BC Dundee was required to meet specified debt covenants at each quarter end and was in breach of certain of these
covenants at these dates. Such breach constitutes an event of default under the debt agreement whereby, 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 waived the breach of the covenants as at March 31, 2016 and June 30,
2016. With respect to the periods ending September 30, 2016 and December 31, 2016, the breached undertakings and
resultant event of default continued. On November 22, 2016, Investec provided a forbearance letter stating that it does
not intend to exercise its rights to request early payment of the outstanding debt; however, it has reserved its right to
review this decision periodically, with no obligation to keep the Company advised in this regard.

Due to Investec being entitled to request early payment of the outstanding debt, as a result of the breach in covenants
referred to preceding, management has determined that the total Investec debt including warrant liability of R161.3
million be classified as current borrowings.

As of December 31, 2016, R178.5 million (December 31, 2015: R190.7 million) had been drawn pursuant to the Investec
loan facilities. The Group was fully drawn on the Term Loan Facility and Bullet Facility, and had R22.0 million undrawn in
the Working Capital Facility. The available Working Capital Facility amount can only be drawn subject to Investec's
approval. As of December 31, 2015, the Group was fully drawn on each of the Term Loan Facility, Bullet Facility
and Working Capital Facility.

The movement in the Investec borrowings is as follows:
                                                                                             December 31, 2016    December 31, 2015
Opening balance                                                                                    169 250 278          138 047 902
Accretion of warrant asset                                                                           3 403 107            2 528 568
Amortisation of deferred cost                                                                          513 522              403 483
Interest accrued                                                                                       103 306            3 657 707
Net drawdown from working capital facility                                                          25 000 000           41 632 006
Repayments                                                                                        (37 253 800)         (17 019 388)
Closing balance                                                                                    161 016 413          169 250 278

Following the Fifth Amendment, the Investec facilities are repayable as follows, unless Investec elects to request early
repayment of the outstanding debt as a result of the covenant breach:

                                                                                              December 31, 2016   December 31, 2015
12 months                                                                                            30 000 000          25 714 284
13-24 months                                                                                         30 000 000          25 714 284
25-36 months                                                                                        118 541 211          25 714 284
37-48 months                                                                                                  -         113 548 854
49-60 months                                                                                                  -                   -
Greater than 60 months                                                                                        -                   -
Total                                                                                               178 541 211         190 691 706

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 recognised 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, 2016 was obtained using the Black-Scholes option pricing model
and the following assumptions: expected volatility of 83.9%, life of 2.5 years, risk-free interest rate of 0.8% and an
expected dividend yield of 0% (year ended December 31, 2015: expected volatility of 75.9%, life of 3.5 years, risk-free
interest rate of 0.6% and an expected dividend yield of 0%).

The movement in the warrant liability is as follows:
                                                                                              December 31, 2016   December 31, 2015
Opening balance                                                                                       2 144 609           8 818 534
Fair value adjustment                                                                               (1 790 373)         (6 830 115)
Foreign exchange differences                                                                            (9 609)             156 190
Closing balance                                                                                         344 627           2 144 609

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.

20 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 during the year ended December 31, 2015, 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. As a result of restrictions that prevented RCF from being able to exercise, this
deadline has been extended indefinitely as at December 31, 2016. 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 during the year December 31, 2015, which had no cash flow impact on the Group. The new financial
liability has been recognised 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.

Effective September 30, 2016, the Company entered into an amended convertible loan agreement with RCF (the "2016
Amendment"), the terms of which were substantially agreed upon on September 30, 2016. In terms of the 2016
Amendment, RCF agreed to an interest holiday beginning July 1, 2016, with a reduction in the interest rate to 1.29%
during the interest holiday period.

In accordance with IAS 39, Financial Instruments: Recognition and Measurement, the terms of the 2016 Amendment
were considered substantially different to the RCF convertible loan agreement, as amended on December 2, 2015.
Consequently, IAS 39 required an extinguishment of the RCF convertible loan and the recognition of a new financial
liability. A resultant loss on extinguishment of debt of R50.6 million was recognised during the year ended December
31, 2016, which had no cash flow impact on the Group.

As of December 31, 2016, the Company was fully drawn on the US$27.0 million (R371.0 million) RCF Convertible Loan,
after the RCF First Tranche Conversion. As of December 31, 2015, the Company had drawn US$27.0 million (R419.6
million).

The movement in the RCF Convertible Loan is as follows:
                                                                                              December 31, 2016   December 31, 2015
Opening balance                                                                                     299 753 845         132 542 252
Extinguishment of debt                                                                               91 931 498         342 940 670
RCF First Tranche Conversion                                                                                  -        (14 354 277)
Loan proceeds                                                                                                 -          74 395 051
Conversion option liability                                                                        (38 266 953)       (308 192 739)
Loan issue costs                                                                                              -           (134 253)
Accretion expense                                                                                    19 285 822          17 691 471
Effect of foreign currency exchange difference                                                     (36 415 990)          54 865 670
Long-term portion of RCF loan facilities                                                            336 288 222         299 753 845

Conversion option liability

The RCF Convertible Loan has been recognised 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 R371.0 million) (year ended December 31, 2015: US$27.0 million
(approximately R419.6 million)) using the effective interest rate method at approximately 5.3% (year ended December
31, 2015: 39.1%). The movement in the conversion option liability is as follows:

                                                                                             December 31, 2016    December 31, 2015
Opening balance                                                                                    124 378 349           54 088 555
Extinguishment of debt                                                                             (3 017 257)        (147 060 548)
RCF First Tranche Conversion                                                                                 -          (8 308 530)
Conversion option liability                                                                                  -          308 192 739
Fair value adjustment                                                                             (90 753 244)         (93 781 283)
Foreign currency translation adjustment                                                              1 297 498           11 247 416
Closing balance                                                                                     31 905 346          124 378 349

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, 2016 was obtained using the Black-Scholes option
pricing model and the following assumptions: expected volatility of 91%, life of 2.5 years, risk-free interest rate of 0.8%
and expected dividend yield of 0% (year ended December 31, 2015: expected volatility of 82%, life of 3.5 years, risk-free
interest rate of 0.6% 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.

21 ASSET RETIREMENT OBLIGATION
                                                                                          December 31, 2016       December 31, 2015
Opening balance                                                                                  17 656 218              21 422 396
Change in estimate                                                                               11 701 999             (3 766 178)
- Included in property, plant and equipment                                                      11 088 687             (4 242 640)
- Reversal of provision                                                                           (463 667)                (31 771)
- Unwinding of discount                                                                           1 076 979                 508 233
Closing balance                                                                                  29 358 217              17 656 218
Current portion                                                                                 (2 664 205)             (2 664 205)
Non-current portion                                                                              26 694 012              14 992 013

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 10). A provision is recognised 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 17-19 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, 2016       December 31, 2015
Discount rate (%)                                                                                      9.68                   10.19
Inflation rate (%)                                                                                     5.60                    5.80

22 TRADE AND OTHER PAYABLES
                                                                                           December 31, 2016      December 31, 2015
Trade payables                                                                                   100 730 476            108 928 655
Audit fees                                                                                         1 158 860              1 099 190
Receiver of Revenue - VAT                                                                         16 542 599                      -
Deferred revenue                                                                                  21 882 268              1 298 219
Sundry payables and accruals                                                                       7 244 432             39 588 615
Leave pay provision                                                                               10 703 779             10 486 295
Total                                                                                            158 262 414            161 400 974

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

Included in trade payables as of December 31, 2016 is R60.5 million (December 31, 2015: R64.9 million) owing to STA. Of
this amount, R6.0 million (December 31, 2015: R25.6 million) has been deferred for repayment on terms agreed with
STA. Interest is accruing monthly on the deferred amount 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, 2016       December 31, 2015
Canadian Dollars                                                                                   2 651 694              8 903 998
United States Dollars                                                                              1 957 564              2 817 333
Rands                                                                                            153 609 919            149 646 814
Great Britain Pound                                                                                   43 237                 32 829
Total                                                                                            158 262 414            161 400 974

23 CURRENT TAX ASSETS AND LIABILITIES
                                                                                           December 31, 2016      December 31, 2015
Current tax assets:
Tax refund receivable                                                                                      -                 51 516
Total                                                                                                      -                 51 516
Current tax liabilities:
Income tax payable                                                                                 5 765 822                      -
Withholding tax payable                                                                            3 009 538                      -
Total                                                                                              8 775 360                      -

24 FINANCIAL INSTRUMENTS BY CATEGORY

The Company's financial assets and financial liabilities as at December 31, 2016 and December 31, 2015 were as follows:

Financial instruments                                    Loans and       Fair value   Liabilities at           Other          Total
                                                       receivables   through profit       fair value  liabilities at
                                                                            or loss   through profit  amortised cost
                                                                                             or loss
December 31, 2016
Trade and other receivables (excluding
non-financial assets)                                   74 865 191                -                -               -     74 865 191
Investments in financial assets                                  -       41 633 486                -               -     41 633 486
Cash (excluding restricted cash)                        13 753 934                -                -               -     13 753 934
Non-interest bearing receivables                         1 902 205                -                -               -      1 902 205
Investec borrowings                                              -                -                -   (161 016 413)  (161 016 413)
RCF loan facilities                                              -                -     (31 905 346)   (336 288 222)  (368 193 568)
Trade and other payables (excluding
non-financial liabilities)                                       -                -                -   (119 837 547)  (119 837 547)

Financial instruments                                  Loans and       Fair value    Liabilities at           Other           Total
                                                     receivables   through profit        fair value  liabilities at
                                                                          or loss    through profit  amortised 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)

25 CASH UTILISED IN OPERATIONS
                                                                                           December 31, 2016      December 31, 2015
Loss before income tax                                                                          (37 369 093)          (546 469 100)
Adjusted for:
Depreciation and amortization                                                                     57 025 518             76 151 497
Impairment of property, plant and equipment and goodwill
and other intangible assets                                                                                -            137 889 236
Unrealised foreign exchange (gain)/loss-net                                                     (37 092 233)             66 739 574
Impairment of trade receivables                                                                          881                  (881)
Net loss on disposal of property, plant and equipment                                              4 008 157              3 602 813
Fair value adjustment on investments in financial assets                                           (819 006)            (1 637 192)
Fair value adjustment on conversion option and warrant liability                                (92 543 617)          (100 588 904)
Reversal of asset retirement obligation provision                                                  (463 664)               (31 771)
Stock-based compensation                                                                          10 314 388                799 149
Penalties                                                                                          1 517 752                      -
Loss on remeasurement on assets held for sale                                                              -             10 833 333
Loss on extinguishment of debt                                                                    50 647 288            195 880 122
Shares issued to directors and management                                                                  -              2 329 585
Finance income - cash                                                                            (1 547 684)              (849 975)
Finance cost - cash                                                                               21 104 264             13 929 495
Finance cost - non-cash                                                                           51 567 993             76 371 420
Net changes in working capital                                                                    25 727 553             13 567 704
Cash utilised in operations                                                                       52 078 497           (51 483 895)

26 RELATED PARTIES

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

                                                                                           December 31, 2016      December 31, 2015
Payments for services rendered
RCF(1)                                                                                               909 173              3 408 092
Total                                                                                                909 173              3 408 092

The following balances were outstanding at the end of the reporting period:
                                                                                           December 31, 2016      December 31, 2015
Related party payables
RCF(1)                                                                                             2 342 508              9 284 251
Total                                                                                              2 342 508              9 284 251

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 third amended and
    restated convertible loan agreement with RCF, RCF has invoiced the Company for costs incurred relating to the loan
    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, 2016, which amounted to R29.2 million (year
    ended December 31, 2015: R51.6 million) (note 17).

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, 2016       December 31, 2015
Short-term benefits                                                                              15 902 633              16 861 296
Share-based payments                                                                                176 514                 799 149
Total                                                                                            16 079 147              17 660 445

During the year ended December 31, 2016, 600 000 share options were granted to officers of the Company on August
26, 2016, with a portion vesting immediately and the balance vesting over a two-year period (year ended December 31,
2015: 3 899 397 share options). The fair value of these share options were estimated to be a negligible amount using
the Black-Scholes option pricing model (year ended December 31, 2015: R1.2 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. Amounts owing to directors and other key management personnel were R1.2 million as of December
31, 2016 as compared to R0.2 million at December 31, 2015.

27 COMMITMENTS AND CONTINGENCIES

Management Contracts

Certain management contracts require that payments of approximately R3.1 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, 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 tonne, 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 tonnes mined at the fixed rate per tonne.

Capital Commitments

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

                                                                                              December 31, 2016   December 31, 2015
Property, plant and equipment                                                                         2 919 134           1 754 679

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.

Effective November 20, 2015, regulations governing financial provisions for asset retirement obligations was
transitioned from the Mineral and Petroleum Resources Development Act ("MPRDA") to the National Environmental
Management Act ("NEMA"). There is currently substantial uncertainty regarding the revised requirements for financial
provisions pursuant to NEMA. Management is currently seeking clarification of the revised requirements in order to
determine the expected impact of the change, which may result in a significant increase to the asset retirement
obligation. One of the key changes in the requirements is that closure cost assessment now has to be based on a
"Sudden Closure" assessment and third party rates whereas pursuant to the MPRDA, it was based on the end of mine
life and prescribed rates. Uncertainty exists around the transitional arrangements although the implementation date of
the new Act is expected to be February 20, 2019.

Outstanding Legal Proceedings

On March 20, 2015, the Association of Mineworkers and Construction Union ("AMCU") brought an application against
BC Dundee and Zinoju Coal (Pty) Ltd ("Zinoju") in the Labour Court of South Africa pertaining to the retrenchment
process undertaken in terms of Section 189A of the South Africa Labour Relations Act ("LRA") which was concluded in
March 2015. The matter was heard by the Labour Court on April 14, 2015, and on April 24, 2015, the Labour Court
dismissed the application brought by AMCU with costs. AMCU appealed the judgement and the appeal was heard by the
Labour Appeal Court on November 4, 2015. On May 11, 2016, the Labour Appeal Court dismissed AMCU's appeal with
no order as to costs. 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 external 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, an 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. On March 23, 2016, Avemore Trust
filed a counter application for the Ministerial Decision to be remitted for consideration by the Minister. The Company's
external 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.

SARS Correspondence

During the year ended December 31, 2016, BC Dundee received a letter of demand from SARS with regards to an
investigation conducted by them on diesel refunds claimed by BC Dundee under the South African Customs and Excise
Act, 91 of 1964. As per the notification, the SARS Commissioner has disallowed diesel refunds in the amount of R13.8
million (including interest) for the period December 2012 to February 2016. The Company applied to SARS to suspend
payment, however, this request was denied. SARS has requested payment in three equal instalments of R4.9 million
between March 2017 and May 2017. The Company requested SARS to enter into more favorable instalment terms and
is awaiting feedback from SARS. The Company has disputed the disallowance of diesel refunds and believes it has a
defendable case, however, the amount of R13.8 million has been included in trade and other payables.

During the year ended December 31, 2016, Zinoju received correspondence from SARS after conducting an audit of the
2012 to 2014 tax returns, disallowing an expense claimed in the 2012 tax return. The total exposure is approximately
R3.0 million plus penalties of R1.5 million and interest of R1.8 million, all of which have been provided for as at
December 31, 2016. The Company raised an objection to SARS disputing the penalties and interest levied, however, the
objection was disallowed. The Company is currently drafting an appeal to the SARS Commissioner to defend its case.

28 SUBSEQUENT EVENTS

Issuance of Share Capital

Subsequent to December 31, 2016, the Company issued additional shares to STA in settlement of a portion of the
contract mining fees for the period October 1, 2016 and December 31, 2016. An additional 4 286 908 Common Shares
were issued based on an agreed share price of C$0.05.

Investec facility revised terms 

The Magdalena mine current LOM has a main development panel, which is Panel 417.  It is critical this panel be developed 
to allow the mine's sections with enough pit room. Based on drilling results in panel 417, a dyke of 22 meters thick, 
with a 13.5 meter down-throw was intersected. In terms of the life of mine planning for Magdalena, the mine must develop 
through this dyke in order to establish pit-room and access the LOM block towards South-West of the reserves. 
Funding was required for this development, and Investec was approached to make the undrawn R22.0 million Working Capital 
Facility available for this purpose.

Investec has agreed to release the funds, subject to agreement being reached on the following revised terms and conditions: 

- The Panel 417 project implementation shall be reviewed and its completion verified by a Project Oversight Committee appointed by Investec.
- Investec agrees to not exercise its rights arising from events of default until July 15, 2017.
- Investec will review the terms and conditions of the facility after July 15, 2017, with a view to agreeing terms and 
  conditions of an extension of the final maturity date for a period of no less than 2 years, subject to the project having 
  been successfully completed to the Project Oversight Committee's satisfaction.
- Investec will release the R22.0 million as working capital for the purpose of ensuring the project is completed timeously.
- A Life of Mine Royalty ("LOMR") shall be payable to Investec on all bituminous coal sales with effect from July 1, 2017, 
  calculated at a rate of 3.54% on all bituminous coal sold.
- If all amounts owing under the facility are paid on or before June 30, 2018, the Company shall pay Investec a fee equal to 
  the greater of the aggregate amount of the LOMR which was payable until the date of repayment, and R22.0 million, minus the 
  aggregate amount of the LOMR which was paid to Investec up to that date. The LOMR shall be terminated if the facilities are 
  fully repaid before June 30, 2018.

On February 22, 2017, the Company accepted and agreed to Investec's revised terms and conditions to the term loan and revolving 
credit facility and is currently negotiating a formal amendment to the loan agreement.


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 28, 2017

Sponsor: Questco Proprietary Limited



Date: 28/03/2017 04:00:00 Supplied by www.sharenet.co.za                     
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