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GBG - Great Basin Gold Limited - Audited consolidated financial statements
for the years ended December 31, 2011 and 2010
GREAT BASIN GOLD LIMITED
(Incorporated in Canada and registered as an External Company in South
Africa)
(Registration No. 2006/021304/10)
Share Code: GBG ISIN Number: CA3901241057
("Great Basin" or "the Company")
AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31,
2011 AND 2010
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in thousands of Canadian Dollars)
December 31 December 31 January 1
2011 2010 2010
$`000 $`000 $`000
Assets
Current assets
Cash and cash equivalents 25,749 12,855 89,464
Trade and other receivables 14,060 9,340 5,053
Inventories 19,694 11,560 26,312
Available-for-sale financial - - 4,961
assets
Financial assets at fair value - - 207
through profit or loss
Other current assets 2,404 1,283 865
61,907 35,038 126,862
Non-current assets
Inventories 7,998 6,880 -
Loan due from related party 3,784 13,372 -
Property, plant and equipment 720,213 695,374 359,281
Restricted cash - - 2,439
Other assets 5,327 4,719 4,590
Deferred income tax assets 51,081 - -
TOTAL ASSETS 850,310 755,383 493,172
Liabilities
Current liabilities
Trade and other payables 56,038 61,731 29,206
Current portion of long-term debt 20,371 53,516 43,768
Current portion of other 3,050 278 -
liabilities
79,459 115,525 72,974
Non-current liabilities
Long-term debt 262,075 156,062 86,948
Other liabilities 31,197 12,419 -
Site reclamation obligations 6,011 5,660 3,990
Total liabilities 378,742 289,666 163,912
Equity
Share capital 833,643 709,449 567,596
Warrants - 6,108 13,104
Contributed surplus 83,337 77,676 74,403
Accumulated other comprehensive (73,764) 26,395 927
(loss) income
Deficit (371,648) (353,911) (326,770)
Total equity 471,568 465,717 329,260
TOTAL LIABILITIES AND EQUITY 850,310 755,383 493,172
CONSOLIDATED STATEMENTS OF LOSS
For the years ended December 31, 2011 and 2010
(Expressed in thousands of Canadian Dollars)
2011 2010
$`000 $`000
Revenue 170,324 99,706
Cost of operations
Production cost (101,543) (65,683)
Depletion charge (5,553) (6,673)
Depreciation charge (12,679) (3,427)
Expenses
Exploration expenses (9,616) (10,450)
Pre-development expenses (17,703) (13,397)
Corporate and administrative cost (7,950) (7,630)
Environmental impact study (2,232) (2,580)
Foreign exchange gain - net 2,079 4,641
Salaries and compensation
Salaries and wages (8,701) (7,528)
Share based payments expense (4,912) (4,887)
Profit (loss) from operating 1,514 (17,908)
activities
Interest expense (24,614) (64)
Interest income 1,562 1,827
Net interest (expense) income (23,052) 1,763
Loss from operating activities (21,538) (16,145)
after net interest
Impairment of loan due from related (13,680) -
party
Loss on derivatives instruments - (30,096) (9,958)
net
Loss before income taxes (65,314) (26,103)
Income tax recovery (expense) 47,577 (1,038)
Net loss for the year (17,737) (27,141)
Basic and diluted loss per share (0.04) (0.08)
Weighted average number of common 459,099 358,711
shares outstanding (thousands)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
For the years ended December 31, 2011 and 2010
(Expressed in thousands of Canadian Dollars)
2011 2010
$`000 $`000
Net loss for the year (17,737) (27,141)
Other comprehensive loss
Changes in fair value of financial - 603
instruments
Realized gain on available-for-sale - (1,530)
financial instruments upon transfer
Cumulative translation adjustment (100,159) 26,395
Other comprehensive (loss) for the (100,159) 25,468
year
Comprehensive loss for the year (117,896) (1,673)
CONSOLIDATED STATEMENTS OF C
For the years ended December 31, 2011 and 2010
(Expressed in thousands of Canadian Dollars)
2011 2010
$`000 $`000
Common shares
Balance - January 1 709,449 567,596
Employee share options - proceeds on 7,463 14,308
issuing shares
Warrants - proceeds on issuing shares 35,393 100,290
Shares issued for settlement of senior 8,012
secured notes -
Shares issued for mineral properties - 19,243
Proceeds on issuance of shares in public -
offering 81,175
Other 163 -
Balance - December 31 833,643 709,449
Share purchase warrants
Balance - January 1 6,108 13,104
Proceeds on issuing shares (6,053) (5,811)
Fair value of share purchase warrants (55) (1,185)
expired
Balance - December 31 - 6,108
Contributed surplus
Balance - January 1 77,676 74,403
Employee share options
Value of services recognized 8,407 7,469
Proceeds on issuing shares (2,794) (5,212)
Warrants
Fair value of share purchase warrants 55 1,185
expired
Deferred income tax on expired share (7) (169)
purchase warrants
Balance - December 31 83,337 77,676
Deficit
Balance - January 1 (353,911) (326,770)
Net loss for the year (17,737) (27,141)
Balance - December 31 (371,648) (353,911)
Accumulated other comprehensive income
(loss)
Balance - January 1 26,395 927
Other comprehensive (loss) income (100,159) 25,468
Balance - December 31 (73,764) 26,395
Total accumulated comprehensive loss and (445,412) (327,516)
deficit at end of the year
TOTAL SHAREHOLDERS` EQUITY 471,568 465,717
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2011 and 2010
(Expressed in thousands of Canadian Dollars)
2011 2010
$`000 $`000
Operating activities
Loss for the year (17,737) (27,141)
Items not involving cash
Production non-cash charges 2,895 4,213
Depletion 5,553 6,673
Depreciation 13,356 226
Exploration non-cash charges 150 291
Pre-development non-cash charges 1,163 1,077
Share donation 163 -
Unrealized foreign exchange gain (5,252) (6,613)
Share based payments expense 4,912 4,887
Impairment of loan due from related 13,680 -
party
Loss on derivative instruments - net 29,904 9,958
Deferred income tax recovery (49,685) (169)
Adjusted for
Interest expense 24,614 64
Interest income (1,562) (1,827)
Changes in non-cash operating working
capital
Trade and other receivables (5,442) (5,200)
Other current assets (1,201) (408)
Inventories (9,094) 6,812
Trade and other payables 17,773 4,432
Net cash generated from (utilized by) 24,190 (2,725)
operating activities
Investing activity
Advance to related party (4,506) (1,072)
Net proceeds on sale of financial - 3,527
instruments
Purchase of property, plant and (159,114) (229,529)
equipment
Additions to restricted cash - (6,204)
Interest income 562 1,600
Reclamation deposits (847) (62)
Net cash utilized by investing (163,905) (231,740)
activities
Financing activities
Common shares and warrants issued for 115,184 103,500
cash, net of issue costs
Proceeds on issuance of debt 135,321 72,478
Repayment of debt (80,214) (6,811)
Interest expense (19,148) (10,513)
Net cash generated from financing 151,143 158,654
activities
Increase (decrease) in cash and cash 11,428 (75,811)
equivalents
Cash and cash equivalents, beginning of 12,855 89,464
year
Foreign exchange movement on cash and 1,466 (798)
cash equivalents
Cash and cash equivalents, end of year 25,749 12,855
1. NATURE OF OPERATIONS
Great Basin Gold Ltd. is incorporated under the laws of the Province of
British Columbia and its registered address is 1108-1030 West Georgia Street,
Vancouver BC, Canada. Great Basin Gold Ltd., including its subsidiaries
("Great Basin" or "the Company"), is a mineral exploration and development
company with two operating assets, both in the production build-up phase, the
Hollister Project on the Carlin Trend in Nevada, USA and the Burnstone
Project in the Witwatersrand Goldfields in South Africa. Over and above
further exploration being conducted at the above mentioned properties,
greenfields exploration is being undertaken in Tanzania and Mozambique.
2. BASIS OF PREPARATIONS AND ADOPTION OF IFRS
The Company prepares its consolidated financial statements in accordance with
Canadian Generally Accepted Accounting Principles ("GAAP") as set out in the
Handbook of the Canadian Institute of Chartered Accountants ("CICA
Handbook"). In 2010, the CICA Handbook was revised to incorporate
International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board ("IASB") and to require publicly
accountable enterprises to apply these standards effective for years
beginning on or after January 1, 2011. Accordingly, these are the Company`s
first annual consolidated financial statements prepared in accordance with
IFRS as issued by the IASB. In these financial statements, the term "Canadian
GAAP" refers to Canadian GAAP before the adoption of IFRS.
The consolidated financial statements have been prepared in compliance with
IFRS as issued by the IASB. Subject to certain transition elections and
exceptions disclosed in note 29 of the full set of financial statements, the
Company has consistently applied the accounting policies used in the
preparation of its opening IFRS statement of financial position at January 1,
2010 throughout all periods presented, as if these policies had always been
in effect. Note 29 of the full set of financial statements discloses the
impact of the transition to IFRS on the Company`s reported financial
position, financial performance and cash flows, including the nature and
effect of significant changes in accounting policies from those used in the
Company`s consolidated financial statements for the year ended December 31,
2010 prepared under Canadian GAAP.
The consolidated financial statements have been prepared under the historical
cost convention, as modified by the revaluation of certain financial assets
and financial liabilities (including derivative instruments) at fair value
through profit or loss.
These financial statements consolidate the accounts of the Company and its
subsidiaries which the Company controls by having the power to govern the
financial and operating policies. Subsidiaries are all entities, including
special purpose entities, over which the group has the power to govern the
financial and operating policies generally accompanying a shareholding of
more than one half of the voting rights.
Subsidiaries are fully consolidated from the date on which control is
obtained by the Company and are de-consolidated from the date that control
ceases. Intercompany transactions, balances, income and expenses, and income
and losses are eliminated.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires management to use judgment
in applying its accounting policies and estimates and assumptions about the
future. Estimates and other judgments are continuously evaluated and are
based on management`s experience and other factors, including expectations
about future events that are believed to be reasonable under the
circumstances. These estimates may have a significant impact on the financial
statements.
Mineral resources and reserves estimates and the impact on the carrying value
of property, plant and equipment and depreciation and depletion charges
Mineral resources and reserves are estimated by professional geologists and
engineers in accordance with recognized industry, professional and regulatory
standards. These estimates require inputs such as future metal prices,
future operating costs, and various technical, geological, engineering and
construction parameters. Changes in any of these inputs could cause a
significant change in the estimated resources and reserves, which in turn
could have a material effect on the carrying value of property, plant and
equipment and depreciation and depletion charges. The carrying value of
property, plant and equipment are considered in terms of the remaining useful
life of the particular asset. These estimates are prepared by engineers in
accordance with their knowledge and experience in the mining industry. Re-
assessment of the remaining useful life could cause a significant change in
the carrying value recorded for property, plant and equipment.
Depreciation and depletion of mineral properties and mine infrastructure is
calculated and charged to earnings on the unit-of-production method. Proven
and probable mineral reserves as well as an allocation of mineral resources
not yet included in the mineral reserves are used in the unit-of-production
method. The allocation of mineral resources included in the calculation of
depreciation and depletion is based on management`s estimates of resources to
be converted into economical mineable reserves over the life of the project
based on historical project and industry data on similar ore bodies. Changes
to the mineral reserves and resources will impact on the depreciation and
depletion charges recorded in earnings.
(b) Inventories and the allocation of ore development, indirect mining and
overhead expenses to production and underground development costs.
Inventories are measured at the lower of cost or net realizable value. Net
realizable value is the estimated selling price in the ordinary course of
business less the estimated cost of completion and the estimated cost
necessary to perform the sale. Production costs include allocated ore
development and overhead expenses and constitute the cost of an inventory
item. The determination of estimated selling prices, estimated completion and
selling costs, and cost allocations are done by management in accordance with
their knowledge and experience in the mining industry. Additional information
obtained in the future might impact on the allocation of these expenses.
(c) Site reclamation obligations and the determination of accretion
Upon the completion of any mining activities, the Company will ordinarily be
required to undertake environmental reclamation activities in accordance with
local and/or industry standards. The estimated costs of these reclamation
activities are dependent on labour costs, the environmental impact of the
Company`s operations, the effectiveness of the chosen reclamation techniques
and applicable government environmental standards. Refer to note 17 of the
full set of financial statements for more details about assumptions used in
estimating the future reclamation obligation.
(d) Share based payments expense
From time to time, the Company grants share purchase options to directors,
employees, and service providers. The Company uses an option pricing model
to estimate a value for these options. This model, and other models which
are used to value options, require inputs such as expected volatility,
expected life to exercise, and interest rates. Refer to note 18(b) of the
full set of financial statements for more details about the inputs used in
valuing the share based payment expense.
(e) Valuation of equity components
The Company from time to time may grant share purchase warrants as part of
its capital raising and conclusion of business transactions. The Company
uses an option pricing model to estimate a value for these warrants. This
model, and other models which are used to value the warrants, require inputs
such as expected volatility, expected life to exercise, and interest rates.
A compound financial instrument is a debt security with an embedded
conversion option and requires the separate recognition of the liability and
equity component. The fair value of the liability portion of the convertible
bond was determined using a market interest rate for an equivalent debt
instrument. This amount was recorded as a liability and the remainder of the
proceeds was allocated to the conversion option and is recognized under
contributed surplus. Refer to note 15(a) for more details about assumptions
used in estimating the residual amount of the convertible debentures.
(f) Deferred income taxes
Deferred income tax assets and liabilities are computed based on differences
between the carrying amount of existing assets and liabilities on the
statement of financial position and their corresponding tax values, using the
substantively enacted income tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered
or settled. Deferred income tax assets also result from unused loss carry
forwards and other deductions. Deferred tax assets are recognized to the
extent that they are considered more likely than not to be realized.
Financial instruments
If the value for a financial instrument cannot be obtained from an active
market, the Company establishes fair value by using valuation techniques.
These include the use of recent arm`s length transactions, reference to other
instruments that are substantially the same, discounted cash flow analysis,
estimated market related interest rates, and option pricing models refined to
reflect the issuer`s specific circumstances.
(h) Mine development and production start date
Development of a project commence following the positive evaluation of the
project feasibility and a conscious development decision by the Company.
Various factors, including capital and production costs estimates, future
metal prices as well as the extraction method of the minerals, might impact
on the feasibility of a project during the development phase which are
continuously evaluated and monitored as new information becomes available.
The production start date is determined by evaluating the construction status
of a project with specific reference to the availability of the major
components required to commence with uninterrupted production of saleable
metal. This decision is made prior to completion of the construction phase
taking into account the various required technical performance levels of
major asset components within the project. Subsequent events following the
predetermined production start date is not taken into account.
4. SEGMENT DISCLOSURE
The Company operates in reportable operating segments to deliver on its
strategy to explore, develop and explode mineral properties. Management has
determined the operating segments based on the reports reviewed by the
Company`s Chief Operating Decision Maker ("CODM") that are used to make
strategic decisions. The Company`s CODM is its Chief Executive Officer.
Segment statement of income - December 2011
North South Tanzanian Other1 Total
American African operations $`000 $`000
operations operations $`000
$`000 $`000
Revenue 135,199 35,125 - - 170,324
Cost of operations
Production cost (60,827) (40,716) - - (101,543)
Depletion charge (5,063) (490) - - (5,553)
Depreciation (3,933) (8,746) - - (12,679)
charge
Expenses
Exploration (8,069) (365) (1,182) - (9,616)
expenses
Pre-development (17,703) - - - (17,703)
expenses
Corporate and (219) (719) (587) (6,425) (7,950)
administrative
cost
Environmental (2,232) - - - (2,232)
impact study
Foreign exchange - (27) 10 2,096 2,079
(loss)gain - net
Salaries and
compensation
Salaries and - - - (8,701) (8,701)
wages
Share based - - - (4,912) (4,912)
payments expense
Profit (loss) from 37,153 (15,938) (1,759) (17,942) 1,514
operating
activities
Interest expense (3,005) (899) - (20,710) (24,614)
Interest income - 1,392 - 170 1,562
Net interest (3,005) 493 - (20,540) (23,052)
(expense) income
Profit (loss) from 34,148 (15,445) (1,759) (38,482) (21,538)
operating
activities after
net interest
Impairment of loan - (13,680) - - (13,680)
due from related
party
(Loss) profit on (13,209) 16 - (16,903) (30,096)
derivatives
instruments - net
Profit (loss) 20,939 (29,109) (1,759) (55,385) (65,314)
before income
taxes
Income tax 47,573 - (3) 7 47,577
recovery (expense)
Net profit (loss) 68,512 (29,109) (1,762) (55,378) (17,737)
for the year
1 Corporate entities
Segment statement of income - December 2010
North South Tanzanian Other1 Total
American African operations $`000 $`000
operations operations $`000
$`000 $`000
Revenue 99,706 - - - 99,706
Cost of operations
Production cost (65,683) - - - (65,683)
Depletion charge (6,673) - - - (6,673)
Depreciation (3,427) - - - (3,427)
charge
Expenses
Exploration (8,202) (522) (1,726) - (10,450)
expenses
Pre-development (13,397) - - - (13,397)
expenses
Corporate and (49) - (134) (7,447) (7,630)
administrative
cost
Environmental (2,580) - - - (2,580)
impact study
Foreign exchange - - (71) 4,712 4,641
(loss)gain - net
Salaries and
compensation
Salaries and - - - (7,528) (7,528)
wages
Share based - - - (4,887) (4,887)
payments expense
Loss from (305) (522) (1,931) (15,150) (17,908)
operating
activities
Interest expense (64) - - - (64)
Interest income - - - 1,827 1,827
Net interest (64) - - 1,827 1,763
(expense) income
Loss from (369) (522) (1,931) (13,323) (16,145)
operating
activities after
net interest
Loss on - - - (9,958) (9,958)
derivatives
instruments - net
Loss before income (369) (522) (1,931) (23,281) (26,103)
taxes
Income tax (1,216) - (4) 182 (1,038)
(expense) recovery
Net loss for the (1,585) (522) (1,935) (23,099) (27,141)
year
1 Corporate entities
Refined precious metals were sold to RK Mine Finance Trust I ("RK Mine")
under the terms of an off-take agreement.
In addition, unprocessed ore was sold under the terms of ore purchase
agreements to Newmont Mining Corporation during 2010.
Statement of financial position
December 31, 2011
North South Tanzanian Other1 Total
American African operations $`000 $`000
operations operations $`000
$`000 $`000
Total assets 180,682 613,772 45,392 10,464 850,310
Total liabilities 100,198 174,941 19 103,584 378,742
December 31, 2010
North South Tanzanian Other1 Total
American African operations $`000 $`000
operations operations $`000
$`000 $`000
Total assets 115,797 579,380 45,744 14,462 755,383
Total liabilities 56,713 137,451 55 95,447 289,666
January 1, 2010
North South Tanzanian Other1 Total
American African operations $`000 $`000
operations operations $`000
$`000 $`000
Total assets 128,855 259,938 26,537 77,842 493,172
Total liabilities 58,234 17,300 97 88,281 163,912
Additions to non-current assets
December 31, 2011
North South Tanzanian Other1 Total
American African operations $`000 $`000
operations operations $`000
$`000 $`000
Non-current 7,353 143,641 (117) 89 150,966
assets2
December 31, 2010
North South Tanzanian Other1 Total
American African operations $`000 $`000
operations operations $`000
$`000 $`000
Non-current 9,430 292,029 19,336 1,755 322,550
assets2
1 Corporate entities
2 Additions to non-current assets exclude other than financial instruments
and deferred tax assets
The full set of financial statements, Management Discussion and Analysis and
Annual Information Form are available on Great Basin`s website:
www.grtbasin.com
Approved by the Board of Directors
Ferdi Dippenaar Ronald W Thiessen
Director Director
Ground Floor, 138 West Street 1500 Royal Centre, 1055 West
Sandown, Johannesburg Georgia Street,
South Africa Vancouver, BC Canada V6E 4N7
Tel 011 301 1800 Toll Free 1 800 667'2114
Fax 011 301 1840
www.grtbasin.com
2 April 2012
Johannesburg
Sponsor
Sasfin Capital (A division of Sasfin Bank Limited)
Date: 02/04/2012 07:05:03 Supplied by www.sharenet.co.za
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