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Consolidated financial statements for the period ended June 30, 2013 and 2012- unaudited
Giyani Gold Corporation
(formerly 99 Capital Corporation)
(Incorporated and registered in Canada)
(Registration number BC-C0887454)
Share code on the TSXV: WDG
Share code on the JSE: GIY ISIN: CA37636L1076
(“Giyani Gold” or “the company” or “the group”)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED
JUNE 30, 2013 AND 2012
(Expressed in Canadian Dollars)
Management's Responsibility for Consolidated Financial Statements
The accompanying consolidated financial statements of Giyani Gold Corp. (the "Company") are the
responsibility of management and the Board of Directors. The consolidated financial statements have
been prepared by management, on behalf of the Board of Directors, in accordance with the accounting
policies disclosed in the notes to the consolidated financial statements. Where necessary, management
has made informed judgments and estimates in accounting for transactions which were not complete at
the balance sheet date. In the opinion of management, the consolidated financial statements have been
prepared within acceptable limits of materiality and are in accordance with International Financial
Reporting Standards appropriate in the circumstances
Management has established processes, which are in place to provide it sufficient knowledge to support
management representations that it has exercised reasonable diligence that (i) the consolidated financial
statements do not contain any untrue statement of material fact or omit to state a material fact required to
be stated or that is necessary to make a statement not misleading in light of the circumstances under
which it is made, as of the date of, and for the periods presented by, the consolidated financial statements
and (ii) the consolidated financial statements fairly present in all material respects the financial condition,
results of operations and cash flows of the Company, as of the date of and for the periods presented by
the consolidated financial statements.
The Board of Directors is responsible for reviewing and approving the consolidated financial statements
together with other financial information of the Company and for ensuring that management fulfills its
financial reporting responsibilities. An Audit Committee assists the Board of Directors in fulfilling this
responsibility. The Audit Committee meets with management to review the financial reporting process and
the consolidated financial statements together with other financial information of the Company. The Audit
Committee reports its findings to the Board of Directors for its consideration in approving the consolidated
financial statements together with other financial information of the Company for issuance to the
shareholders.
Management recognizes its responsibility for conducting the Company’s affairs in compliance with
established financial standards, and applicable laws and regulations, and for maintaining proper
standards of conduct for its activities.
ON BEHALF OF THE BOARD
“Ed Guimaraes” , Director
“Scott Kelly” , Director
Notice of No Auditor Review of Condensed Interim Financial Statements
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review
of the condensed interim consolidated financial statements, they must be accompanied by a notice
indicating that the financial statements have not been reviewed by an auditor.
The accompanying condensed unaudited interim consolidated financial statements of the Company have
been prepared by, and are the responsibility of, the Company’s management.
Giyani Gold Corporation
Condensed Consolidated Interim Statements of Financial Position
(Expressed in Canadian dollars)
(Unaudited)
June 30, December 31,
2013 2012
$ $
Assets
Current
Cash and cash equivalents 641,047 349,800
Term deposit (Note 4) 1,010,681 3,052,333
Restricted cash (Note 5) 200,000 200,000
Amounts receivable 220,874 75,499
Prepaids 60,179 31,472
2,132,780 3,709,105
Equipment (Note 6) 84,816 94,048
Exploration and evaluation assets (Note 8) 3,830,374 3,121,836
Investment jointly controlled entity Rock Island 5,680,292 5,680,292
11,728,262 12,605,281
Liabilities
Current
Accounts payable and accrued liabilities 791,033 465,242
Due to related parties (Note 13) 50,777 6,000
841,810 471,242
Shareholders’ Equity
Share capital (Note 10) 17,278,342 16,910,654
Contributed surplus 4,518,646 8,813,568
Warrants 4,372,660 4,372,660
Non-controlling interest (13,048) (13,048)
Deficit (15,270,147) (13,577,134)
10,886,452 12,134,040
11,728,262 12,605,281
Note 1: Nature of operations and going concern
Note 15: Commitments
ON BEHALF OF THE BOARD
“Ed Guimaraes” , Director
“Scott Kelly” , Director
See notes to the consolidated financial statements.
Giyani Gold Corporation
Condensed Consolidated Statements of Loss and Comprehensive Loss
(Expressed in Canadian dollars)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2013 2012 2013 2012
$ $ $ $
Expenses
Amortization 5,786 4,206 9,233 7,653
Investor Relations 3,446 46,000 63,396 85,950
Conferences and business development 6,621 23,701 24,335 61,415
General exploration (5,081) (585) 101 4,598
Management and consulting 435,775 392,626 720,571 677,422
Office and rent 95,541 43,746 148,397 96,602
Share-based payments 77,738 - 77,738 -
Professional fees 121,387 130,702 186,927 196,242
Telephone and internet 8,247 12,958 25,248 29,959
Transfer agent and filing fees 584,748 ,685 604,766 27,703
Travel 42,991 10,786 115,328 83,123
Loss Before Interest and Other Items 1,377,199 671,825 1,976,040 1,270,667
Other Items
Foreign exchange loss (gain) (183,840) 2,956 (170,546) 16,250
Interest and other income (131,259) (10,504) (131,259) (10,504)
Taxes 18,779 - 18,779 -
296,321) (7,548) (283,027) (5,746)
Net Loss and Comprehensive loss for the
year 1,080,878 664,277 1,693,013 1,276,413
Loss per share (basic and diluted) 0.02 0.02 0.03 0.03
Weighted average number of common
shares outstanding 54,364,497 40,916,458 54,364,497 39,428,278
See notes to the consolidated financial statements.
Giyani Gold Corporation
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Expressed in Canadian dollars)
(Unaudited)
Six Months ended June 30, 2013 and 2012
Capital Stock Contributed Warrants Non-controlling Shareholders’
Interest
Number of Shares Amount Surplus Deficit Equity
Balance, January 1, 2013 54,224,828 $ 16,910,654 $ 4,440,908 $ 4,372,660 $ (13,048) $ (13,577,134) $ 12,134,040
Shares issued on exercise of
warrants 153,750 130,688 - - - - 130,688
Shares issued on exercise of
options and reallocation of
contributed surplus 250,000 37,500 - - - - 37,500
Private placement - Flow
Through - - - - - - -
Shares of subsidiary issued to
non-controlling interest 350,000 199,500 - - - - 199,500
Options - - 77,738 - - - 77,738
Share Issue Costs - - - - - - -
Comprehensive loss - - - - - (1,693,013) (1,693,013)
Balance, June 30, 2013 54,978,578 $ 17,278,342 $ 4,518,646 $ 4,372,660 $ (13,048) $ (15,270,147) $ 10,886,452
Balance, January 1, 2012 37,208,181 $ 8,696,441 $ 2,619,916 - 48,000 (8,044,371) $ 3,319,986
Shares Issued – private
placement (less finders fee) 2,150,913 2,409,803 - - - - 2,409,803
Warrants Issued - (391,466) 391,466 - - - -
Shares issued – warrant
exercises 1,562,500 461,459 - - - - 461,459
Shares issued on exercise of
options 350,000 52,700 - - - - 52,700
Net loss and Comprehensive loss - - - - - (1,276,411) (1,276,411)
Balance, June 30, 2012 41,271,594 $ 11,228,937 $ 3,011,382 - 48,000 $ (9,320,782) $ 4,967,537
See notes to the consolidated financial statements.
Giyani Gold Corporation
Condensed Consolidated Statements of Cash Flows
For the period ended June 30, 2013, and 2012
(Expressed in Canadian dollars)
(Unaudited)
Six Months Six Months
Ended Ended
June 30, June 30,
2013 2012
$ $
Operating Activities
Net loss for the period (1,693,013) (1,276,411)
Adjustment for items not involving cash
Amortization 9,233 7,653
Share-based payments 77,738 -
(1,606,043) (1,268,759)
Changes in non-cash working capital
Amounts receivable (145,375) (76,669)
Subscription receivable - 49,750
Prepaids (28,707) (351,466)
Accounts payable and accrued liabilities 325,791 (63,206)
Due to related parties 44,777 (283,168)
Cash used in operating activities (1,409,556) (1,993,518)
Investing Activities
Deferred acquisition costs - (260,422)
Redemption (purchase) of term deposit 539,319 (1,388,745)
Purchase of equipment - (40,464)
Exploration and evaluation asset
expenditures (509,038) (969,592)
Cash used in investing activities 30,281 (2,659,224)
Financing Activities
Proceeds from conversion of warrants
and options 168,188 514,159
Proceeds from issuance of shares (net of
costs) - 2,409,803
Cash provided by financing activities 168,188 2,923,962
Total (Outflow) inflow of cash (1,211,088) (1,728,780)
Cash, beginning of year 1,852,135 2,074,158
Cash, end of year 641,047 345,378
See notes to the consolidated financial statements.
Giyani Gold Corporation
Notes to the Condensed Consolidated Financial Statements
June 30, 2013
(Expressed in Canadian dollars, unless otherwise stated)
1. NATURE OF OPERATIONS AND GOING CONCERN
Giyani Gold Corp. (the "Company" or "Giyani") is engaged in the acquisition, exploration,
evaluation and development of principally gold resource properties in South Africa and Canada.
The Company’s primary focus is the development of the Company’s jointly controlled entity Rock
island Gold Project and ongoing exploration for gold at its Northern Ontario Project. The
Company is incorporated and domiciled in Canada and its shares are publicly traded on the
Toronto Venture Stock Exchange. As at June 25, 2013, the Company listed on the Johannesburg
Stock Exchange (“JSE”). As at July 4, 2013, the Company listed on the Namibian Stock
Exchange (“NSX”). The registered address is Suite 403 - 277 Lakeshore Road East, Oakville,
Ontario, L6J 6J3
These consolidated financial statements have been prepared using International Financial
Reporting Standards (“IFRS”) applicable to a “going concern”, which assume that the Company
will continue in operation for the foreseeable future and will be able to realize its assets and
discharge its liabilities in the normal course of operations.
The Company reported a net loss attributable to parent of $1,080,878 or $0.03 per share for the
three month period ended June 30, 2013 versus $664,277 in the same period in 2012 and had an
accumulated deficit of $15,270,147 at June 30, 2013 (December 31, 2012 - $13,577,134). Year to
date, the Company reported a net loss attributable to parent of $1,693,013 versus $1,276,013 for
the same period of the previous year.
In addition to its ongoing working capital requirements, the Company must secure sufficient
funding for existing commitments and obtain new cash resources sufficient to cover expected
expenses.
These circumstances may cast significant doubt as to the ability of the Company to meet its
obligations as they come due and, accordingly, the appropriateness of the use of accounting
principles applicable to a going concern
Management plans to secure the necessary financing through a combination of the exercise of
existing warrants for the purchase of common shares, the issue of new equity instruments and
the entering into joint venture arrangements. Nevertheless, there is no assurance that these
Initiatives will be successful.
The recovery of amounts capitalized for exploration and evaluation assets at June 30, 2013 in the
consolidated balance sheet is dependent upon the ability of the Company to arrange appropriate
financing to complete the development and continued exploration of the properties and upon
future profitable production or proceeds from their disposition.
On an ongoing basis, the Company examines various financing alternatives to address future
funding requirements. Although Giyani has been successful in these activities in the past, the
Company has no assurance on the success or sufficiency of these initiatives in the foreseeable
future. These consolidated financial statements do not reflect the adjustments to the carrying
values of assets and liabilities and the reported expenses and balance sheet classifications that
would be necessary should the going concern assumption be inappropriate, and those
adjustments could be material.
2. BASIS OF PRESENTATION
a. Statement of compliance
These condensed consolidated interim financial statement have been prepared in accordance
with IFRS as issued by the IASB applicable to the preparation of interim financial statements,
including IAS 34, Interim Financial Reporting, and should be read in conjunction with the audited
annual financial statements for the year ended December 31, 2012, which were prepared in
accordance with IFRS as issued by the IASB.
These condensed interim consolidated financial statements were approved by the Board of
Directors for issue on August 1, 2013.
b. Basis of Presentation
The consolidated financial statements have been prepared on a going concern basis using
historical cost.
The consolidated financial statements are presented in Canadian Dollars, which is the
Company’s functional and presentation currency except where otherwise indicated.
c. Basis of Consolidation
The consolidated financial statements incorporate the financial statements of the Company and
entities controlled by the Company. Control is achieved where the Company has the power to
govern the financial and operating policies of an invested entity so as to obtain benefits from its
activities. All intercompany transactions, balances, income and expenses are eliminated on
consolidation. The consolidated financial statements include the accounts of the Company and
the following subsidiaries:
Entity Name Company Place of Functional Currency
Ownership Incorporation
2299895 Ontario Inc 94.3% Canada Canadian dollar
Alpha 111 Holdings Co Ltd 100.0% Barbados Canadian dollar
Beta 222 Holdings Co Ltd 100.0% Barbados Canadian dollar
Giyani Gold Holdings 333 (Pty Ltd 100.0% South Africa South African rand
Giyani Gold South Africa (Pty) Ltd 100.0% South Africa South African rand
Lexshell 831 Investments (Pty) Ltd 100.0% South Africa South African rand
GGC South Africa Mining 111 (Pty) Ltd 100.0% South Africa South African rand
Obliwize (Pty) Ltd 100.0% South Africa South African rand
Obliweb (Pty) Ltd 100.0% South Africa South African rand
Lexshell 837 investments (Pty) Ltd 64.0% South Africa South African rand
Rock Island Trading 17 (Pty) Ltd (1) 28.8% South Africa South African rand
(1) Rock Island Trading 17 (Pty) Ltd is a jointly controlled entity.
All inter-company transaction, balances, income and expenses are eliminated on consolidation.
All South Africa corporations currently have a fiscal year-end of February.
3. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed in these condensed interim consolidated financial
statements are consistent with those applied in the Company’s annual financial statements for the
year ended December 31, 2012, except as described below.
a. Accounting Standards Adopted
The Company has adopted the following new and revised accounting standards, along with any
consequential amendments, effective January 1, 2013. These changes were made in accordance
with the applicable transitional provisions.
International Financial Reporting Standard 10, Consolidated Financial Statements (“IFRS 10”)
IFRS 10 replaces the guidance on control and consolidation in IAS 27 “Consolidated and
Separate Financial Statements”, and SIC-12 “Consolidation – Special Purpose Entities”. IFRS 10
requires consolidation of an investee only if the investor possesses power over the investee, has
exposure to variable returns from its involvement with the investee and has the ability to use its
power over the investee to affect its returns. Detailed guidance is provided on applying the
definition of control. The accounting requirements for consolidation have remained largely
consistent with IAS 27.
The Company assessed its consolidation conclusions on January 1, 2013 and determined that
the adoption of IFRS 10 did not result in any change in the consolidation status of any of its
subsidiaries and investees.
International Financial Reporting Standard 11, Joint Arrangements (“IFRS 11”) IFRS 11
supersedes IAS 31 “Interests in Joint Ventures” and requires joint arrangements to be classified
either as joint operations or joint ventures depending on the contractual rights and obligations of
each investor that jointly controls the arrangement. For joint operations, a company recognizes its
share of assets, liabilities, revenues and expenses of the joint operation. An investment in a joint
venture is accounted for using the equity method as set out in IAS 28 “Investments in Associates
and Joint Ventures”.
The Company has reviewed its joint arrangements and concluded that the adoption of IFRS 11
did not result in any changes in the accounting for its joint arrangements.
International Financial Reporting Standard 12, Disclosure of Interest in Other Entities (“IFRS 12”)
IFRS 12 was issued in May 2011 and it is a new and comprehensive standard on disclosure
requirements for all forms of interests in other entities, including subsidiaries, joint arrangements,
associates and unconsolidated structured entities. The standard carries forward existing
disclosures and also introduces significant additional disclosure requirements that address the
nature of, and risks associated with, an entity’s interest in other entities.
The Company has not implemented any disclosure changes in these interim statements as a
result of this standard. Additional disclosure will be required in the Company’s annual statements.
International Financial Reporting Standard 13, Fair Value Measurement (“IFRS 13”) IFRS 13
establishes new guidance on fair value measurement and related disclosure requirements and
clarifies that the measurement of fair value of an asset or liability is based on assumptions that
market participants would use when pricing the asset or liability under current market conditions,
including assumptions about risk.
The adoption of IFRS 13 by the Company did not require any adjustments to the valuation
techniques used by the Company to measure fair value and did not result in any measurement
adjustments; however, the adoption of this standard has resulted in additional disclosure about
the fair value of financial instruments that are measured on a recurring basis as reported in the
interim consolidated financial statements.
b. Accounting Standards Issued But Not Yet Applied
The Company has not yet adopted the following new accounting pronouncements which are
effective for fiscal periods of the Company beginning on or after January 1, 2014:
International Financial Reporting Standard 9, Financial Instruments (“IFRS 9”)
IFRS 9 was issued in November 2009 and contained requirements for financial assets. This
standard addresses classification and measurement of financial assets and replaces the multiple
category and measurement models in IAS 39 for debt instruments with a new mixed
measurement model having only two categories: amortized cost and fair value through profit or
loss.
IFRS 9 also replaces the models for measuring equity instruments, and such instruments are
either recognized at fair value through profit or loss or at fair value through other comprehensive
income. Where such equity instruments are measured at fair value through other comprehensive
income, dividends are recognized in profit or loss to the extent not clearly representing a return of
investment; however, other gains and losses (including impairments) associated with such
instruments remain in accumulated comprehensive income indefinitely.
Requirements for financial liabilities were added in October 2010 and they largely carried forward
existing requirements in IAS 39, Financial Instruments – Recognition and Measurement, except
that fair value changes due to credit risk for liabilities designated at fair value through profit and
loss would generally be recorded in other comprehensive income.
This standard is required to be applied for accounting periods beginning on or after January 1,
2015, with earlier adoption permitted. The Company has not evaluated the impact of adopting this
standard.
4. TERM DEPOSIT
The Company has a term deposit with a carrying value of $1,010,681 (2012 – $3,052,333). The
term deposit is redeemable in November 2013 and earns interest of approximately 1.65% (2010 –
2.05%). The fair value of the term deposit approximates its carrying value due to the short term
to maturity.
5. RESTRICTED CASH
The Company has credit cards with a major financial institution with an aggregate credit limit of
$200,000. The financial institution holds a $200,000 (2011- Nil) deposit as collateral on the credit
amount as long as the credit cards are active. The restricted cash amounts would change if there
were any changes to the credit limits on the cards.
6. EQUIPMENT
Furniture and Mining and Computer Phone
Fixtures Exploration Equipment Equipment Total
COST
Balance, January 1, 2011 $ - $ - $ - $ - $ -
Additions 22,922 32,922 12,852 2,852 71,548
Depreciation 1,637 2,976 2,142 285 7,040
Balance, December 31, 2011 $ 21,285 $ 29,946 $ 10,710 $ 2,567 64,508
Additions 8,264 10,662 10,513 17,531 46,970
Depreciation 3,631 6,210 5,322 2,266 17,429
Balance, December 31, 2012 $ 25,918 $ 34,938 $ 15,901 $ 17,832 $ 94,049
Additions - - - - -
Depreciation 1,851 2,948 2,650 1,783 9,233
Balance, June 30, 2013 $ 24,067 $ 31,450 $ 13,251 $ 16,049 $ 84,816
7. REHABILITATION DEPOSIT
The Department of Mineral Resources (“DMR”) in South Africa requires a deposit or bank
guarantee as security for the duty to rehabilitate any mineral property. The funds will be
refunded once the rehabilitation has been completed to the satisfaction of DMR. As at June 30,
2013 Giyani has recorded a deposit of $15,786 (2011- nil) included in exploration and evaluation
assets.
8. EXPLORATION AND EVALUATION ASSETS
Killins Emerald Abbie Lake Keating Thibodeau South Africa Total
Balance, January 1, 2012 $ - $ - $ 368,112 $ 177,150 $ 336,871 $ - $ 882,133
Current expenditures 267,200 354,523 195,034 1 21,797 709,188 - 1,647,742
Exploration South Africa - - - - - 1,638,020 1,638,020
Asset write-down - - - - (1,046,058) - (1,046,059)
Balance, December 31, 2012 $ 267,200 $ 354,523 $ 563,146 $ 298,947 $ - $ 1,638,020 $ 3,121,836
Balance, January 1, 2013 $ 267,200 $ 354,523 $ 563,146 $ 298,947 $ 0 1,638,020 $ 3,121,836
Current expenditures 21,680 8,004 221,770 (54) - 251,400
Exploration South Africa - - - - - 457,138 457,138
Balance, June 30, 2013 $ 288,880 $ 362,527 $ 784,916 $ 298,893 $ 0 $ 2,095,158 $ 3,830,374
In October 2012, the Company made the decision not to renew the option agreement on the Thibodeau lands. The Company has identified
impairment on the entire book value of the asset ($1,046,058).
Pursuant to the joint venture agreement relating to the jointly controlled entity of Rock Island. The Company funds the joint venture with Corridor
Mining Resources (“CMR”) on a 50:50 basis. Both parties are to share the costs evenly on an ongoing basis. Exploration costs are recorded in a
loan account with Rock Island where interest is accrued at an agreed upon rate.. This loan will be repaid out of proceeds from the sale of the Rock
Island asset. The loan is unsecured, with no fixed repayment terms and bears interest at South African prime +1%.
9. INVESTMENT IN MINERAL PROPERTIES
On October 26, 2012, the Company completed the execution of a revised binding agreement (the
“Revised Agreement”) with Kytanite Development Corp. ("Kytanite") pursuant to which the
Company has confirmed its entitlement to acquire Kytanite's interest in the Rock Island gold
properties. The Company acquired 100% of Lexshell 831 (Pty) Ltd (“Lexshell 831”), a Company
duly incorporated and registered in the Republic of South Africa. Lexshell 831 was the legal and
beneficial owner of 80% of the issued and outstanding shares of Lexshell 837 (Pty) Ltd (Lexshell
837), a Company incorporated and registered in the Republic of South Africa. Lexshell 837 owns
50% of the shares of Rock Island Trading (Pty) Ltd, reducing to 45% once the Community trust is
established.
Total consideration paid was U$2,500,000 (CAN $2,497,792) and 2,500,000 common shares
valued at $3,182,500 of the Company. Total acquisition costs of $5,680,292 have been
capitalized. This amount is reviewed annually to identify any potential impairment in the asset.
The exploration asset is proportionality consolidated and held at cost less impairment.
On October 26, 2012, Lexshell 831 sold a further option for 16% of the Common Shares in
Lexshell 837 to Malungani Resources (Pty) Ltd., a company representing the Community Trust
for Rock Island. Total consideration is Rand 3,600,000. No receivable has been set up for this
amount, as it will be paid for proceeds from the property.
Balance January 1, 2012 $ -
Acquisition of jointly controlled entity Rock Island $ 5,680,292
Balance December 31, 2012 $ 5,680,292
Balance June 30, 2013 $ 5,680,292
10. SHARE CAPITAL AND CONTRIBUTED SURPLUS
Authorized: unlimited common shares without par value
Issued:
Number of Share Capital $
Shares
Balance January 1, 2011 32,950,414 6,461,646
Shares issued on exercise of warrants 2,736,644 851,359
Shares issued on exercise of options 285,210 77,109
Private placement 1,235,913 1,306,327
Balance December 31, 2011 37,208,181 8,696,441
Shares issued on exercise of warrants 2,323,987 1,108,724
Shares issued on exercise of options 390,500 105,350
Shares issued on property purchase 2,500,000 3,182,500
Private Placements 11,802,160 8.190.299
Less value ascribed to warrants - (4,372,660)
Balance December 31, 2012 54,224,828 16,910,654
Shares issued on exercise of warrants 153,750 130,688
Shares issued on exercise of options 250,000 37,500
Shares of subsidiary issued to non-controlling 350,000 199,500
interest
Balance June 30, 2013 54,978,578 17,278,342
Share option activities for the periods ended June 30, 2013 and December 31, 2012 are as
follows:
2013 2012
Weighted Weighted
Number of Average Number of Average
Options Exercise Price Options Exercise Price
Balance – beginning of year 3,350,000 $1.43 2,525,000 $1.34
Granted - - 1,675,000 $1.30
Exercised 250,000 $0.05 (390,500) $0.27
Forfeited 225,000 $1.63 (459,500) $1.47
Outstanding and exercisable –
end of year 2,875,000 $1.52 3,350,000 $1.43
Weighted
Average
Remaining
Contractual Exercise
Expiry Date Life in Years Price 2013 2012
July 15, 2015 2.54 $ 0.15 250,000
November 3, 2015 2.84 $ 1.30 575,000 575,000
June 24, 2016 3.48 $ 2.00 450,000 450,000
July 25, 2016 3.57 $ 2.31 250,000 325,000
August 30, 2016 3.67 $ 2.35 75,000 75,000
July 11, 2017 4.53 $1.30 1,425,000 1,575,000
October 18, 2017 4.80 $1.30 100,000 100,000
2,875,000 3,350,000
11. WARRANTS
Warrants
The following table summarizes the number of common shares reserved pursuant to warrant
activities during the period ended June 30, 2013 and December 31, 2012:
2013 2012
Weighted Weighted
Average Average
Number of Exercise Number of Exercise
Warrants Price Warrants Price
Outstanding – beginning of
year 5,901,082 $0.95 2,363,358 $0.48
Granted - - 5,901,082 $0.95
Exercised 153,750 $0.85 (2,323,987) $0.48
Expired - - (39,371) $0.85
Outstanding and exercisable –
end of year 5,747,332 $0.95 5,901,082 $0.95
Weighted
Average
Remaining
Contractual
Expiry Date Life in Years Exercise Price 2013 2012
July 16, 2013 0.55 $ 1.40 1,075,456 1,075,456
October 26, 2014 1.88 $ 0.85 4,671,876 4,825,626
5,747,332 5,901,082
12. RELATED PARTY TRANSACTIONS
Management and consulting fees of $352,001 (2012 - $318,200) were paid to officers and
directors or to companies controlled by officers or directors. In addition stock based payments
awarded to officers and directors of the Company of $77,738 (2012 - $0) were expensed.
The Company incurred services of $154,730 in 2013 (2012 - $90,560) from McCarthy Tétrault
LLP, a law firm where one of the Company’s Directors is a Partner.
At June 30, 2013, the Company owed $50,777 (2012 - $6,000) to related parties.
The Company is a 28.8% shareholder in jointly controlled entity Rock Island Trading (Pty) Ltd
located in South Africa.
Pursuant to the joint venture agreement relating to the assets of Rock Island. The Company
funds the joint venture with Corridor Mining Resources (“CMR”) on a 50:50 basis. 50% of
expenditures incurred by Giyani in respect of Rock Island are recoverable from CMR either by
direct refund, from proceeds of any future sale of the property or from future production from the
property. Both parties are to share the costs evenly on an ongoing basis. Exploration costs are
recorded in a loan account with Rock Island where interest is accrued at an agreed upon rate. As
at June 30, 2013 the Company had advanced $1,815,628 to Rock Island exploration work. This is
net of a repayment by CMR of $401,400 in March 2013. This loan will be repaid out of proceeds
from the sale of the Rock Island asset. The loan is unsecured, with no fixed repayment terms
and bears interest at South African prime +1%.
13. JOINTLY CONTROLLED ENITY
The Company has a 28.8% interest in the jointly controlled entity Rock Island Trading (Pty) Ltd.,
through Lexshell 837 (Pty) Ltd.
The Company recognizes its interests in jointly controlled entities using the proportionate
consolidation method.
14. SEGMENTED INFORMATION
Operating segments are reported in a manner consistent with internal reporting provided to the
chief operating decision-maker. The chief operating decision-maker is responsible for allocating
resources and assessing performance of the operating segments and has been identified as the
Company’s Chief Executive Officer.
The Company has two operating segments: the exploration, evaluation and development of
precious metal mining projects located in Ontario (“Ontario Mining”) and located in South Africa
(“SA Mining”). The rest of the entities within the Company are grouped into a secondary segment
(“Corporate”).
The segmental report is as follows
June 30, 2013 Ontario Mining SA Mining Corporate
Property and Equipment 84,816
Exploration and Evaluation 1,735,216 2,095,158 -
Total Assets 1,735,216 7,025,762 2,967,284
Total Liabilities 78,910 589,458 173,443
Total Loss 66,429 632,634 993,950
Net Additions exploration and evaluation assets 251,400 457,138 -
Impairment to exploration and evaluation assets - - -
June 30, 2012 Ontario Mining SA Mining Corporate
Property and Equipment - - 97,319
Exploration and Evaluation 1,851,726 - -
Total Assets 2,016,082 216,949 3,086,237
Total Liabilities 54,471 - 297,260
Total Loss 19,342 29,646 1,227,423
Net Additions exploration and evaluation assets 969,589 - -
Impairment to exploration and evaluation assets - - -
15. COMMITMENTS
The Company has committed to approximately $1,015,896 over the next 5 years for obligations
under operating leases, rent, exploration and option payments.
2013 2014 2015 2016 2017
Exploration commitments 92,952 407,500 7,500 7,500
Option Payments 75,000 35,000 50,000
Rent (Oakville office) 46,778 95,243 95,243 95,243 7,937
Total 214,730 537,743 152,743 102,743 7,937
The rent payments are for the head office space located in Oakville, Ontario. This lease expires
on January 31, 2017. There are no restrictions imposed on the Company with this lease.
Abbie Lake, Ontario
The Company’s executed an option agreement on September 19, 2011 (the “UCEL Agreement”)
with Upper Canada Explorations Limited (the “Optionor”), an arm’s length party, to earn a 100%
interest in certain surface and mineral rights (the “Abbie Lake Property”) near Sault. Ste. Marie,
Ontario, Canada. The Company is required to pay the Optionor $50,000 upon receipt of the
approval of the UCEL Agreement by the Exchange (the “Approval Date”).
The UCEL Agreement also specifies payments to the Optionor in the amount of $50,000 within 12
months of the Approval Date and a further $50,000 within 24 months of the Approval Date.
Pursuant to an amending agreement dated January 23, 2013, the Company renegotiated the
Initial Work Program to be $600,000 prior to December 31, 2013 and a total of $1,000,000 by
December 31, 2014. As at June 30, 2013, $514,548 has been incurred in expenses relating to the
initial work program.
Keating, Ontario
The Company executed a licensing agreement (the “Michipicoten Agreement”) on November 1,
2011 with 3011650 Nova Scotia Limited, trading as Michipicoten Forest Resources (the
“Licensor”), an arm’s length party, to acquire the license for an exploration area within the District
of Algoma, Ontario, Canada. The term of the lease is 5 years and contains the option to extend
the agreement for an additional 5 years.
The Company is required to pay $8,040 for the first year of the agreement and $500 multiplied by
the number of grid claims that constitute the licensed area for the remaining four years of the
agreement. For the renewal term, 2299895 is required to pay $600 multiplied by the number of
grid claims that constitute the licensed area for the additional 5 years of the agreement. 2299895
is responsible for all taxes related to the licensed area during the term of the Michipicoten
Agreement.
2299895 is required to incur minimum exploration expenditures during each license year. During
each license year of the original term, an annual amount of $2,500 multiplied by the number of
grid claims that constitute the licensed area must be incurred. During each license year of the
renewal term, an annual amount of $3,000 multiplied by the number of grid claims that constitute
the licensed area must be incurred.
On March 21, 2012, the Company executed a agreement (the “Keating East Agreement”) with
2099840 Ontario Inc trading as Emerald Geological Services (the “Licensor”), an arm’s length
party, to acquire an additional 985 Ha of claims (“the Lands”) in the form of certain surface and
mineral rights situated in Keating Township, Ontario, contiguous to Giyani Gold's Abbie Lake-
Keating Property
The agreement entitles 2299895 to acquire a 100% interest in the Lands in exchange for a
combination of consideration comprised of: $126,600 in cash payable over three years; $100,000
in exploration expenditures and other work programs, and up to 200,000 shares in 2299895 over
a period of three years, which shares are exchangeable into shares of Giyani Gold, subject to
satisfaction of certain conditions. Under the terms of the agreement, Emerald has agreed to
relinquish its license and rights in the Lands and to allow the Company to acquire its interest and
rights in the Lands under license from a private arms-length corporate entity to the Company and
the owner of the Lands, in exchange for an annual fee payable to that party and an annual work
program.
On July 12, 2012, the Company executed a licensing agreement with a private arm’s length party
(“Killen agreement”). The agreement entitles the Company to acquire a 100% interest and rights
in 39.5 square kilometers of surface and mineral rights situated in Keating Township, Ontario, in
exchange for an annual fee payable and an annual work program
South Africa
The Company entered into a binding agreement (the “Madonsi Transaction”) to acquire a 74%
interest in historically past-producing Madonsi Gold Mine located in the Giyani Greenstone belt of
South Africa. The Madonsi Transaction will be structured as a purchase by the Company of
100% of the issued and outstanding common shares of Lexshell 845 Investments (Pty) Ltd.
(“Lexshell”), which shares are currently held by Nokuthula Ngubeni (the “Seller”).
Lexshell has entered into a sale of shares and claims agreement to acquire 74% of the issued
and outstanding common shares of Hectocorp (Pty) Ltd. (“Hectocorp”), which has applied for a
prospecting right (permit) for gold for the Madonsi Gold Mine to the Minister of Mines and Energy
of the Republic of South Africa (“the Minister”). The remaining 26% interest in Hectocorp will on
completion of the sale of shares and claims agreement be owned by local South African partners.
As consideration for the acquisition of the interest in Madonsi Gold Mine, the Company will pay to
the Seller a total of $2,000,000 plus a 5% finder’s fee to an arm’s length party. No costs have
been deferred relating to this transaction.
As of the date of the MD&A, the Company has been advised that the Minister is not likely to issue
the prospecting right to Hectocorp and its partners and, accordingly, believe that the likelihood of
the Company acquiring the Madonsi Gold Mine as minimal.
On November 17, 2011 the Company entered into a binding agreement to acquire prospecting
rights from Sephaku Gold Exploration (Proprietary) Limited ("SGE"), the holder of the rights,
which are located in the Giyani Greenstone Belt ("GGB"), South Africa. The transaction will be
structured as an outright purchase of the prospecting rights from SGE, which owns the rights for
the Khavagari and Siyandani gold projects. Upon the execution of a definitive sale agreement and
closing of the transaction, the Company will have 100% interest in these projects.
As consideration for the interest in the Khavagari and Siyandani gold projects, the Company will
provide the vendor a nominal cash payment of approximately Rand 1,000,000.
This transaction has not closed.
16. SUBSEQUENT EVENTS
On February 4, 2013, Giyani announced the divesture of 2299895 Ontario Inc to C Level III Inc.
(TSXV: CLV.P) ("C Level"), a capital pool company under the policies of the TSX Venture
Exchange Inc.
As a result of the proposed transactions, Giyani Gold will become the majority shareholder of C
Level. C Level will continue to operate and expand the Canadian mining exploration activities
independent of Giyani Gold.
Johannesburg
13 September 2013
Designated Advisor
Sasfin Capital
A Division of Sasfin Bank Limited
Date: 13/09/2013 09:33:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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