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GOLIATH GOLD MINING LIMITED - Abridged Audited Condensed Consolidated Financial Results for the Year Ended 31 December 2012 and Notice of AGM

Release Date: 28/03/2013 09:05
Code(s): GGM     PDF:  
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Abridged Audited Condensed Consolidated Financial Results for the Year Ended 31 December 2012 and Notice of AGM

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”)

ABRIDGED AUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR
ENDED 31 DECEMBER 2012 AND NOTICE of ANNUAL GENERAL MEETING

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                                AUDITED              AUDITED
                                           12 months to            12 months
                                            31 December       to 31 December
                          Change                   2012                 2011
                               %                  R’000                R’000
Revenue                    (100)                      -               17 949
Cost of sales              (100)                      -             (27 205)
Gross loss                 (100)                      -              (9 256)
Other income               (100)                      -                  127
Operating expenses         6 922               (35 461)                (505)
Loss on sale of
financial assets               8                   (1 105)           (1 019)
Exploration and pre-
feasibility expenditure       37                 (25 407)           (18 502)
Black Economic
Empowerment
transactions                 100                 (23 770)                  -
Operating loss                                   (85 743)           (29 155)
Finance income                                     1 821                   -
Finance costs                                     (2 019)               (64)
Loss Before Taxation                             (85 941)           (29 219)
Taxation                                              78                   -
Loss for the period                              (85 863)           (29 219)

Other comprehensive
income                                                    -                -
Total Comprehensive
Loss Attributable to
the Parent                   194                 (85 863)           (29 219)

Loss per share (cents)                                 (62)             (28)
Diluted loss per share
(cents)                                                (62)             (28)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                   AUDITED    AUDITED
                                                     as at   as at 31
                                               31 December   December
                                                      2012       2011
                                                     R’000      R’000
ASSETS
Non-current assets
Investment property                                  3 825         -
Property, plant and equipment                       73 417    42 437
Intangibles Assets                                  75 282         -

Current assets
Inventories                                              -       745
Receivables                                          1 865       122
Restricted Cash                                      1 648       721
Cash and cash equivalents                           12 514         -
Total assets                                       16 8551    44 025

EQUITY AND LIABILITIES
Share capital                                      169 860         -
Reserves                                            24 059         -
(Accumulated loss)/ Retained
earnings                                          (44 320)    41 543
Equity attributable to equity
holders of the Group                               149 599    41 543
Non-current liabilities
Provisions                                           1 335     1 173
Current liabilities
Loans from Related Parties                          15 223         -
Trade and Other Payables                             2 394     1 309
Total equity and liabilities                       168 551    44 025

Net asset value per share
(cents)                                              101.5      39.6
Net tangible asset value per
share (cents)                                         50.4      39.6
CONSOLIDATED GROUP STATEMENT OF CHANGES IN EQUITY



                                                    Accumulated
                            Share                 loss/Retained      Total
                          capital      Reserves        earnings     equity
                            R’000         R’000           R’000      R’000

Audited balance at
01 January 2011                   -           -          43 110    43    110
Total comprehensive
loss for the year                 -                    (29 219)    (29 219)
Invested equity                   -           -          27 652      27 652

Audited balance at
31 December 2012                  -           -          41 543     41 543

Audited balance at
01 January 2012                   -           -          41 543     41 543
Total comprehensive
loss for the year                 -           -        (85 863)    (85 863)

Issue of shares           169 860             -               -    169 860
Employee share
option expense                    -         289               -        289
Black Economic
Empowerment
transaction                       -      23 770               -     23 770

Audited balance at
31 December 2012          169 860        24 059        (44 320)    149 599


CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                     AUDITED
                                                         AUDITED   12 months
                                                    12 months to       to 31
                                                     31 December    December
                                                            2012        2011
                                                           R’000       R’000
Cash utilised in operating
activities                                              (33 477)    (26 827)
Cash effect of investing
activities                                                46 883        (825)
Cash effect of financing
activities                                                 (892)        27 652
Net cash change for the year                              12 514             -
Cash at the beginning of the
year                                                           -             -
Net cash at the end of the year                           12 514             -
COMMENTARY

1.   BASIS OF PREPARATION

The financial statements of Goliath Gold for the period ended
31 December 2012 have been prepared under the supervision of Phillip
Spencer   (CA(SA)),   Vice  President:   Finance  in   accordance   with
International   Financial  Reporting   Standards,  the   South   African
Companies Act, 2008 (Act 71 of 2008), as amended 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.

These   results   have   been   audited   by  the   Group’s   auditors,
PricewaterhouseCoopers Incorporated, whose unqualified audit opinion is
available, together with the Annual Report, 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 19 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. 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 (share price at acquisition
date) amounting to R169.860 million. This is considered to be a more
reliable measure of consideration transferred in accordance with IFRS
3.
The comparative information presented in the Annual Report is that of
Megamine at 31 December 2011 for the statement of financial position
and for the year ended 31 December 2011 for the statements of
comprehensive income, changes in equity and cash flows to comply with
the principles of reverse acquisition accounting IFRS 3 Business
Combinations.

The net loss for the Group was R85.863 million for the year ended
31 December 2012, compared to a net loss of R29.219 million for the
year ended 31 December 2011. The main items contributing to the loss
for the year were the increased exploration expenditure as well as the
share based payment expense of R23.770 million incurred as a result of
the black economic empowerment transaction entered into by the Group.
The impairment loss of R22.914 million in 2012 relates to assets which
were flooded at the Megamine site.

The loss per share is set out below:

                                              AUDITED          AUDITED
                                         12 months to        12 months
                                          31 December   to 31 December
                                                 2012             2011
Basic loss per share
(cents)                                          (62)             (28)
Diluted loss per share
(cents)                                          (62)             (28)
Headline loss per share
(cents)                                          (28)             (27)
Diluted headline loss
(cents)                                          (27)             (27)

4.   PROSPECTS AND FUTURE PERFORMANCE

Goliath Gold is focused on creating value by exploring and developing
the Company’s extensive asset base.

Exploration activities during 2012 have primarily been focused on
Goliath Gold’s Megamine project that comprises four contiguous
prospecting rights over the West Vlakfontein, Vlakfontein, Spaarwater
and Wit Nigel areas (which jointly total 34,313 hectares) as well as a
new order mining right for the Sub Nigel area and a portion of
Spaarwater (which includes an additional 3,013 hectares). These
exploration activities included a surface exploration drilling program
consisting of 39 surface boreholes as well as extensive surface and
underground mapping that underpinned the estimation of mineral
resources across the Megamine Project. Total estimated mineral
resources include 12.19 million ounces of gold (including 82.07 million
tonnes grading at 4.62 grams per tonne), with indicated mineral
resources of 3.64 million ounces (including 25.62 million tonnes
grading at 4.42 grams per tonne) and inferred mineral resources of 8.56
million ounces (including 56.45 million tonnes grading at 4.72 grams
per tonne).
Future exploration activities are aimed at enhancing the substantial
mineral resource base estimated during 2012 by advancing these
resources through additional drilling and the application of economic
studies. Two priority areas have been identified, namely the Wit Nigel
7 and 9 Shaft complex and the Houtpoort Payshoot. Eight additional
boreholes are planned for the Wit Nigel 7 and 9 Shaft complex and a
further seven at Houtpoort. The results of this drilling will be
integrated with the existing exploration information to facilitate the
completion of an economic scoping study at the Wit Nigel 7 and 9 Shaft
complex and a pre-feasibility study at Houtpoort.

On 18 April 2012 Goliath Gold and Gold One jointly announced 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 selected portions of the existing mining rights. The
applications for these prospecting rights were lodged with the
Department of Mineral Resources (“DMR”) in December 2012 and have been
formally accepted by the DMR. Goliath Gold expects that the approval
process will be completed by July 2013.

In August 2012 Goliath Gold was granted eight contiguous prospecting
rights (which jointly total 32,467 hectares) for heavy minerals and
rare earths in the Western Cape in the district of Vredendal (“Project
Elephant”). The rights were granted for a period of two years to allow
Goliath Gold to carry out non-invasive prospecting activities. Heavy
mineral sand deposits are mined on a large scale by Exxaro Resources’
Namakwa Sands Mine to the north of the project area and the Tormin
Mineral Sands Project has recently been granted a mining licence to
commence mining of heavy minerals on the beaches adjacent to Project
Elephant. To date Project Elephant has been investigated by the Company
through desktop studies only. The Company is not aware of any
historical mineral resource estimates on the property and based on the
available data an economic viability investigation will be conducted
during 2013.

In December 2012 the Company applied for an exclusive prospecting
licence for the Etendeka Project in Namibia and is currently awaiting
the successful granting of the license. The prospecting license
encompasses base, rare and precious metals.
5.   COMPETENT PERSON’S STATEMENT


The overall competent person for Goliath Gold is Mr Quartus Meyer. The
information in the Annual Report that relates to exploration results is
based on information compiled by Mr Meyer for the purposes of the
SAMREC Code. The information in the Annual Report that relates to
mineral resources is based on information compiled by Dr Carina Lemmer.

The Competent Person for Goliath Gold’s exploration results is Mr
Meyer, who has a master’s degree in science (geology)and who is a
professional natural scientist registered with the South African
Council for Natural Scientific Professions(“SACNASP”) membership number
400063/88, and resides at 27 Mynhardt van Graan Street, Hennenman,
9445. Mr Meyer is Vice President: Exploration, and is a fulltime
employee of Gold One, which has entered into a management agreement
with Goliath Gold. Mr Meyer has 26 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 Goliath Gold’s mineral resources is Dr Lemmer,
who has a doctorate in applied earth sciences (geostatistics) and who
is a professional natural scientist registered with SACNASP, membership
number 400021/03, and resides at 15 Chiselhurst Drive, Rossmore, 2092.
Dr Lemmer is an independent consultant to Goliath Gold, and has been an
independent consultant to the South African mining industry for the
past 23 years. Dr Lemmer has 35 years’ experience in resource
estimation relevant to the style of mineralisation and type of deposit
under consideration, and to the activity which she is undertaking, to
qualify as a Competent Person for the purposes of the SAMREC Code. Mr
Meyer and Dr Lemmer consent to the inclusion in the Annual Report of
the matters based on information compiled by themselves in the form and
context in which they appear.



6.   SEGMENT INFORMATION

Management has determined the operating segments based on the reports
reviewed by the executive committee that are used to make strategic
decisions. The chief operating decision maker considers the business
from a functional perspective and has identified two reportable
segments. The group currently operates in one geographical location
being the East Rand of Johannesburg, performing exploration and mining
activities. During the prior year, Megamine was an active mining
operation and was monitored by the chief operating decision maker
accordingly. However, towards the end of 2011, as a result of closure
of mining operations and halting of pumping activities adjacent to the
Sub Nigel shaft, the shaft became flooded.

Therefore, during 2012 the Group focused entirely on the exploration of
the prospecting rights which were acquired as part of the business
combination. As a result, the only operating segment related to
exploration activities and all assets and liabilities were reclassified
accordingly. No mining activities took place in 2012.

The principal business segments units in the Group are as follows:

 Segment       Scope of operations
  Mining        : Extraction of and extraction processing of gold ore
                fine gold; and

 Exploration   : Potential mining, prospecting and exploration.
                                                                   AUDITED
                                                     AUDITED     12 months
                                                12 months to         to 31
                                                 31 December      December
                                                        2012          2011
                                                       R’000         R’000
Segment Revenue
Mining                                                       -      17 949
Exploration                                                  -           -
Consolidated Segment Revenue                                 -      17 949

Comprehensive Loss for the
period
Mining                                                      -     (29 219)
Exploration                                          (85 863)            -
Consolidated Segment Loss                            (85 863)     (29 219)

Assets
Mining                                                      -       44 025
Exploration                                           168 551            -
Consolidated Total Assets                             168 551       44 025

Liabilities
Mining                                                      -      (2 482)
Exploration                                          (18 952)            -
Consolidated Total Liabilities                       (18 952)      (2 482)


7. RECONCILIATION OF EARNINGS AND NUMBER OF SHARES

HEADLINE EARNINGS PER SHARE
                                                AUDITED            AUDITED
                                           12 months to          12 months
                                            31 December     to 31 December
                                                   2012               2011
Headline loss per share
(cents)                                              (28)             (27)
Diluted headline loss
(cents)                                              (27)             (27)
Reconciliation of headline earnings per share

                                                                 AUDITED
                                                     AUDITED   12 months
                                                12 months to       to 31
                                                 31 December    December
                                                        2012        2011
                                                       R’000       R’000
Loss for the period                                 (85 863)    (29 219)
Adjustments for:
Loss on disposal of assets                             1 105      1 019
Black Economic Empowerment
transactions                                          23 770           -
Impairment of assets                                  22 914           -
Headline loss                                       (38 074)    (28 200)


WEIGHTED AVERAGE NUMBER OF SHARES

                                                                 AUDITED
                                                     AUDITED   12 months
                                                12 months to       to 31
                                                 31 December    December
                                                        2012        2011
Number of shares deemed to be
issued from 01 January 2012                       22 640 612 104 891 947
Number of shares outstanding at
31 December 2012                                115 548 792           -
Weighted average number of
shares                                          138 189 404 104 891 947


8.   SUBSEQUENT EVENTS

In the opinion of the directors, no subsequent event or circumstance
has arisen since 31 December 2012 that requires additional disclosure.

9.   DIVIDENDS

No dividends were declared or paid to shareholders during the year.

10. DIRECTORATE

Neal Froneman resigned as a Chief Executive Officer effective from 31
December 2012 and Richard Stewart was appointed as replacement
effective from 1 January 2013.

11. NOTICE OF ANNUAL GENERAL MEETING

Shareholders are advised that the Annual Report for the year ended
31 December 2012, which incorporates the Notice of Annual General
Meeting, is available on the Company’s website (www.goliathgold.com)
and will be dispatched to shareholders on or about 28 March 2013. The
Annual General Meeting of Goliath Gold will be held at 10:00 on
Tuesday, 30 April 2013 at the office of the majority shareholder,
Constantia Office Park, Bridgeview House, Ground Floor, Corner 14th
Avenue and Hendrik Potgieter Street, Weltevreden Park, 1709.




For and on behalf of the Board

Richard Stewart                    Christopher Chadwick
Chief Executive Officer            Chief Financial Officer

Johannesburg
28 March 2013

Directors:

M Wheatley# (Chairman), R Stewart (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.

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