Wrap Text
Reviewed condensed consolidated interim financial results for the six months ended 30 JUNE 2012
Goliath Gold Mining Limited
Incorporated in the Republic of South Africa
(Registration number: 1933/004523/06)
Share code: GGM ISIN: ZAE000154753
(“Goliath Gold” or “the Company” or “the Group”)
REVIEWED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS FOR THE SIX
MONTHS ENDED 30 JUNE 2012
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Reviewed
six months six months
to 30 June to 30 June
Change 2012 2011
% R’000 R’000
Revenue (100) - 10 021
Cost of sales 100 - (15 435)
Gross loss 100 - (5 414)
General and
administrative expenses (1 742) (5 306) (288)
Fair value adjustments - (1 178) -
Impairment of financial
assets - (93) -
Exploration and pre-
feasibility expenditure (27) (14 411) (11 366)
Share based payment
expense - (31 897) -
Share options expensed 100 - (1 183)
Loss on sale of
financial assets - (1 105) -
Loss on sale of
property plant and
equipment 100 - (1 003)
Operating loss (53 990) (19 254)
Finance income - 1 484 -
Finance costs - (550) -
Loss before taxation (53 056) (19 254)
Taxation - (602) -
Total comprehensive
loss for the period (53 658) (19 254)
Attributable to:
Equity holders of the
Group (179) (53 658) (19 254)
Non-controlling
interest - - -
Total number of
ordinary shares in
issue 147 354 905 104 841 947
Weighted average number
of ordinary shares in
issue 126 356 739 104 801 947
Loss per share (cents) (42.47) (18.36)
Headline loss per share
(cents) (42.47) (17.40)
RECONCILIATION OF HEADLINE EARNINGS
Reviewed Reviewed
six months six months
to 30 June to 30 June
2012 2011
R’000 R’000
Loss for the period (53 658) (19 254)
Adjustments for:
Loss on sale of property plant
and equipment - 1 003
Headline loss (53 658) (18 251)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Unaudited
as at as at 31
30 June December
2012 2011
R’000 R’000
ASSETS
Non-current assets
Investment property 3 825 -
Property, plant and equipment 99 091 42 437
Goodwill 90 873 -
Current assets
Inventories - 745
Other financial assets 15 -
Receivables 1 058 122
Cash and cash equivalents 46 066 721
Total assets 240 928 44 025
EQUITY AND LIABILITIES
Share capital 169 860 -
Reserves 33 312 1 415
(Accumulated loss)/ Retained
earnings (7 560) 40 128
Equity attributable to equity
holders of the Group 195 612 41 543
Non-current liabilities
Deferred tax 16 084 -
Provisions 1 245 1 173
Current liabilities
Loans from related parties 26 896 -
Current tax payable 663 -
Trade and other payables 428 1 309
Total equity and liabilities 240 928 44 025
Net asset value per share
(cents) 132.75 39.61
Net tangible asset value per
share (cents) 101.83 39.61
CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed
six months
Reviewed to
six months to 30 June
30 June 2012 2011
R’000 R’000
Cash utilised in operating
activities (18 408) (17 017)
Cash effect of investing
activities 50 457 (2 197)
Cash effect of financing
activities 12 917 19 246
Net cash change for the period 44 966 32
Cash at the beginning of the
period 1 100 1 068
Net cash at the end of the
period 46 066 1 100
CONSOLIDATED GROUP STATEMENT OF CHANGES IN EQUITY
Accumulated
Share loss/Retained Total
capital Reserves earnings equity
R’000 R’000 R’000 R’000
Balance at
01 January 2011 - 232 43 110 43 342
Loss for the period - (19 254) (19 254)
Invested equity - - 19 246 19 246
Share options
expensed - 1 183 - 1 183
Balance at
30 June 2011 - 1 415 43 102 44 517
Balance at
01 January 2012 - 1 415 40 128 41 543
Loss for the period - - (53 658) (53 658)
Invested equity - - 5 970 5 970
Issue of shares on
acquisition 169 860 - - 169 860
Share based payment
expense - 31 897 - 31 897
Balance at
30 June 2012 169 860 33 312 (7 560) 195 612
COMMENTARY
1. BASIS OF PREPARATION
The half-year report of Goliath Gold for the six months ended 30 June
2012 (“interim period”) has been prepared in accordance with
International Financial Reporting Standards, IAS 34, the Companies Act
of South Africa, 2008 (Act 71 of 2008) and the JSE Listings
Requirements, and are based on appropriate accounting policies,
consistently applied with those applied in the most recent audited
financial statements, which are supported by reasonable and prudent
judgements and estimates.
The half-year report has been prepared under the supervision of
Nico Nieuwenhuis (CA)SA, Vice President: Finance.
The half-year report has been reviewed by the Group’s auditor,
PricewaterhouseCoopers Incorporated, whose unqualified review opinion
is available for inspection at the Company’s registered office.
2. NATURE OF THE BUSINESS
The Company’s main business is that of a mining exploration company.
Its subsidiaries are primarily engaged in the resource sector. The
Company has a primary listing on the JSE, issuer code: GGM.
3. FINANCIAL AND OPERATIONAL PERFORMANCE
Goliath Gold acquired the Megamine business from Gold One Africa
Limited ("Gold One Africa"), a wholly owned subsidiary of Gold One
International Limited ("Gold One"). The transaction was declared
unconditional on 28 March 2012. Goliath Gold settled the price by
issuing 104 891 947 ordinary shares to Gold One Africa resulting in the
issued share capital increasing to 147 354 905 ordinary shares. Gold
One Africa acquired a further 1 215 300 ordinary shares when the
remaining shareholders in Goliath Gold accepted the offer by Gold One
Africa to receive one Gold One share for every 1.2 Goliath Gold shares
held. This resulted in Gold One Africa holding 72% of the issued share
capital in Goliath Gold.
In accordance with IFRS 3 Business Combinations, the transaction was
determined to be a reverse acquisition. In a reverse acquisition the
legal acquirer, Goliath Gold, becomes the accounting acquiree and the
legal acquiree, Megamine, becomes the accounting acquirer. For the
purpose of applying reverse acquisition accounting, the share capital
of Goliath Gold is replaced with the share capital of Megamine. Because
Megamine is not a company, but a division of Gold One Africa (now the
holding company of Goliath Gold) and therefore has no issued share
capital, the share capital of Megamine is based on the fair value of
the issued share capital of Goliath Gold at the acquisition date, i.e.
42 462 958 ordinary shares at R4.00 each amounting to R 169.860
million. This is considered to be a more reliable measure of
consideration transferred in accordance with the Appendix of IFRS 3.
The comparative information presented in the half-year report is that
of Megamine at 31 December 2011 for the statement of financial position
and for the six month period ended 30 June for the statements of
comprehensive income, changes in equity and cash flows to comply with
the principles of reverse acquisition accounting in IFRS 3 Business
Combinations.
The net loss for the Group was R 53.658 million for the six months
ended 30 June 2012, compared to a net loss of R 19.254 million for the
six months ended 30 June 2011. The main items contributing to the loss
for the six months were the increased exploration expenditure as well
as the share based payment expense of R 31.897 million incurred as a
result of the black economic empowerment transaction entered into by
the Group. The results also include the losses incurred by the Sub-
Nigel operations, included in general and administrative expenditure,
which was placed under care and maintenance in September 2011 and was
acquired as part of the acquisition of the Megamine business.
The share based payment expense arises as a result of the fair value of
the option granted to the BEE party, a consortium consisting of
African Vanguard Resources Proprietary Limited, Zakothu Gold Mines
Proprietary Limited, Emseni Proprietary Limited, Cultulite Proprietary
Limited, an Employee Trust and a Community Trust, to acquire a
26% interest in Goliath Gold, through the use of a special purpose
vehicle, Far East Gold Pty Ltd, exceeding the fair value of the cash
and other assets contributed by them.
Management concluded that the transaction is best represented as an
American Call Option, with the strike price equal to the Purchase
Consideration of the BEE Party’s 26% interest. The Purchase
Consideration is to be financed by Goliath Gold at standard commercial
terms. A one factor Monte Carlo simulation model was used to determine
the value of the American Call Option at the transaction date
The loss per share and headline loss per share are 42.47 cents,
compared to the loss per share of 18.36 cents and the headline loss per
share of 17.40 cents for the six months ended 30 June 2011.
4. PROSPECTS AND FUTURE PERFORMANCE
Goliath Gold is focused on creating value by exploring and developing
the Company’s extensive asset base. Exploration activities to date
have primarily focused on Goliath Gold’s Wit Nigel project and the
contiguous Megamine project, purchased from Gold One International on
28 March 2012.
On 12 November 2010, White Water Resources Limited (“WWR”) entered into
an acquisition agreement with Gold One International Limited (“Gold
One”). The acquisition agreement stipulated that Goliath Gold would
acquire the Megamine Business, as defined in the Goliath Gold
Acquisition Circular dated 25 February 2011, from Gold One Africa
Limited (“Gold One Africa”), a wholly-owned subsidiary of Gold One.
The acquisition of the Megamine Business by WWR was completed on
28 March 2012 with the final conditions precedent having been fulfilled
or waived.
The Megamine Business acquired from Gold One comprises 13,043 ha of
contiguous new order prospecting rights (West Vlakfontein, Vlakfontein,
and Spaarwater) and some 3,013 ha over which a new order mining-right
application has been granted (Sub Nigel). The majority of Megamine’s
resource (83%) comprises the Main Reef, estimated at a maximum depth of
approximately 2,500 metres below surface, while the balance includes
the Big Pebble Marker Reef, which is estimated between depths of
approximately 500 metres and 1,200 metres below surface. Megamine’s
resource currently comprises 3.02-million ounces (including 21.55-
million tonnes at 4.36 grams per tonne) in the indicated resource
category and 9.63-million ounces (including 64.62-million tonnes at
4.64 grams per tonne) in the inferred category. These resources are
determined and quoted in accordance with the South African Code for
Reporting of Exploration Results, Mineral Resources and Mineral
Reserves (SAMREC Code). A Competent Persons Report (CPR) was completed
for the Megamine assets by SRK Consulting (Pty) Ltd with an effective
date of 1 October 2010. This CPR was included in the transaction
circular and is currently available on the Company’s Website.
In June 2011, Gold One and Goliath Gold announced that Gold One would
be closing its Sub Nigel 1 Shaft due to rising water levels in the East
Rand Basin as a result of the cessation of pumping at the nearby
Grootvlei mine. At the time of closure, the Sub Nigel 1 Shaft was
being used a training facility by Gold One. The Sub Nigel operation
was placed on care and maintenance in November 2011.
During 2011 and 2012 Goliath Gold’s primary exploration focus has been
on the Wit Nigel project, located in the southern extremity of the East
Rand Goldfield of the Witwatersrand Basin, some 55 kilometers southeast
of Johannesburg. The Wit Nigel project represents the up-dip extension
of the Megamine project acquired from Gold One. Exploration activities
have included surface exploration drilling, surface mapping and
sampling as well as the capture and QA/QC (quality assurance/quality
control) of historical mining and exploration information.
There have not been any SAMREC compliant mineral resources or reserves
declared on the Wit Nigel project to date and as such no material
changes have occurred during the reporting period. Ongoing exploration
during 2012 has resulted in a further 27 surface exploration boreholes
having been drilled on the Wit Nigel project during 2012. The recent
exploration results in addition to those disclosed in the Goliath Gold
annual report released in March 2012 for the nine months ended 31
December 2012, are available on Goliath Gold’s website.
Goliath Gold is currently completing an updated mineral resource
estimation for the combined Wit Nigel and Megamine project area,
considering updated exploration results from the surface exploration
drilling, surface sampling and mapping undertaken at Wit Nigel, as well
as historical information that has been sourced and captured. The
updated mineral resource will be completed by the end of 2012.
In addition to the ongoing exploration and development of the Company’s
existing asset portfolio, Goliath Gold Management will also continue to
explore external, value accretive, growth opportunities through
possible acquisitions. In this regard, Goliath Gold and Gold One
International jointly announced on 17 April 2012, that they had entered
into an acquisition agreement with the Joint Provisional Liquidators
representing Pamodzi Gold East Rand Proprietary Limited. In terms of
the agreement, Goliath Gold purchased the historical East Rand mining
and technical data from the Joint Provisional Liquidators and in
addition, the acquisition agreement provides for the withdrawal of the
existing Pamodzi East Rand conversion applications in respect of their
existing old order mining rights, and for Goliath Gold to
simultaneously lodge applications for prospecting rights over the areas
covered by the existing mining rights. The Acquisition Agreement with
the Sellers is subject to certain conditions precedent. Goliath Gold
and the Joint Provisional Liquidators are working towards completing
the outstanding conditions precedent by the end of 2012.
5. COMPETENT PERSON’S STATEMENT
The overall Competent Person for Goliath Gold is Dr Richard Stewart,
who has a doctorate in geology and who is a professional natural
scientist registered with the South African Council for Natural
Scientific Professions ("SACNASP"), membership number 400051/04. Dr
Stewart is also a member of the Geological Society of South Africa and
is Executive Vice President: Technical Services for Gold One, with
which he is a full-time employee and which has entered into a
management agreement with Goliath Gold. Dr Stewart has 12 years'
experience relevant to the style of mineralisation and type of deposit
under consideration, and to the activity which he is undertaking, to
qualify as a Competent Person for the purposes of the SAMREC Code.
The Competent Person for the Wit Nigel and Megamine Prospecting areas
is Mr Quartus Meyer, who is a professional natural scientist registered
with SACNASP, membership number 400063/88. Mr Meyer is the Vice
President: Exploration for Gold One with which he is a full-time
employee and which has entered into a management agreement with Goliath
Gold.
Mr Meyer has 25 years' experience relevant to the style of
mineralisation and type of deposits under consideration, and the
activity which he is undertaking, to the SAMREC Code.
Dr Stewart and Mr Meyer consent to the inclusion in this half-year
report of the matters based in information compiled by themselves in
the form and context in which they appear.
Dr Stewart Mr Meyer
28 September 2012 28 September 2012
There have not been any material changes to the October 2010 mineral
resource estimate at the Megamine Project, as contained within the
Megamine CPR that is available on the Company’s website. Updated
exploration results associated with the Wit Nigel project are available
on the Company’s website and will inform the company’s first mineral
resource estimate on this project anticipated to be completed by the
end of 2012.
6. SEGMENTAL REPORTING
Management has determined the operating segments of the Group based on
the reports reviewed by the Board that are used to make strategic
decisions. The Board considers the business from a functional
perspective and has identified two reportable segments, namely
Exploration and Other operations.
Exploration: Involved in prospecting and exploration activities.
Other operations: Represents the Sub-Nigel Mining business placed
under care and maintenance as well as corporate
activities.
Business Segment Information
Exploration Other operations
Six months Six months Six months Six months
to to to to
30 June 30 June 30 June 30 June
2012 2011 2012 2011
R'000 R'000 R'000 R'000
Revenue - - - 10 021
Operating loss (14 411) (11 366) (39 579) (7 888)
Finance income - - 1 484 -
Finance costs - - (550) -
(Loss)/Profit
before tax (14 411) (11 366) (38 645) (7 888)
Income tax
expense - - (602) -
(Loss)/Profit
for the period (14 411) (11 366) (39 247) (7 888)
At 31 At 31
At 30 June December At 30 June December
2012 2012 2012 2011
Segment assets 57 182 - 183 746 44 025
Segment
liabilities (16 145) - (29 171) (2 482)
Net assets 41 037 - 154 575 41 543
Group
Six Six
months to months to
30 June 30 June
2012 2011
R'000 R'000
Revenue - 10 021
Operating loss (53 990) (19 254)
Finance income 1 484 -
Finance costs (550) -
Loss before
tax (53 056) (19 254)
Income tax
expense (602) -
Loss/(Profit)
for the period (53 658) (19 254)
At 31
At 30 December
June 2012 2012
Segment assets 240 928 44 025
Segment
liabilities (45 316) (2 482)
Net assets 195 612 41 543
7. CONTINGENCIES, LEGAL PROCEEDINGS AND GUARANTEES
Bank guarantees to the amount of R 2.339 million have been issued by
financial institutions in favour of the Department of Mineral Resources
to secure the Group's rehabilitation obligations in respect of various
prospecting rights. Other than the aforementioned, there has been no
significant change to the contingencies, legal proceedings and
guarantees as disclosed in the annual report for the year ended
31 December 2011 during this interim period.
8. POST-BALANCE SHEET EVENTS
The Board is not aware of any material events that have occurred after
the interim period, up to and including the date of this report.
9. DIVIDENDS
No dividends were declared or paid to shareholders during the interim
period.
10. DIRECTORATE
There have been no changes in the directors of the Group during the
interim period.
For and on behalf of the Board
Neal Froneman Christopher Chadwick
Chief Executive Officer Chief Financial Officer
Johannesburg
28 September 2012
Directors:
M Wheatley# (Chairman), N Froneman (Chief Executive Officer),
C Chadwick (Chief Financial Officer), K Rayner* (Deputy Chairman),
J Vilakazi*, P Nel*.
#
Non-executive *Independent Non-executive
REGISTERED OFFICE
First Floor, Empire Office Park, 55 Empire Road, Parktown,
Johannesburg, 2193
COMPANY SECRETARY
Pierre Kruger
First Floor, Empire Office Park, 55 Empire Road, Parktown,
Johannesburg, 2193
SPONSOR
Merchantec Capital
AUDITORS
PricewaterhouseCoopers Inc.
Date: 28/09/2012 08:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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