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Reviewed Condensed Consolidated Interim Financial Results For The Six Months Ended 30 June 2013
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 2013
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Reviewed
Reviewed restated
six months six months
30 June 30 June
Change 2013 2012
% R’000 R’000
Other income 100 1 500 -
General and
administrative expenses 54 (8 168) (5 306)
Fair value adjustments (42) (682) (1 178)
Impairment of assets (100) - (93)
Exploration and pre-
feasibility expenditure (39) (8 820) (14 411)
BEE transactions (100) - (23 770)
Employee share options 100 (2 197) -
Loss on sale of
financial assets (100) - (1 105)
Operating loss (18 367) (45 863)
Finance income (79) 315 1 484
Finance costs 48 (813) (550)
Loss before taxation (18 865) (44 929)
Taxation (104) 22 (602)
Total comprehensive
income for the period (18 843) (45 531)
Attributable to:
Equity holders of the
Group (59) (18 843) (45 531)
Total number of
ordinary shares in
issue 147 354 905 147 354 905
Weighted average number
of ordinary shares in
issue 147 354 905 129 023 901
Basic and diluted loss
per share (cents) (13) (35)
Basic and diluted
headline loss per share
(cents) (12) (34)
RECONCILIATION OF HEADLINE LOSS
Reviewed
Reviewed restated
six months six months
30 June 30 June
2013 2012
R’000 R’000
Loss for the period (18 843) (45 531)
Adjustments for:
Loss on disposal of assets - 1 105
Impairment of assets - 93
Fair value adjustments 682 -
Headline loss (18 161) (44 333)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
30 June 31 December
2013 2012
R’000 R’000
ASSETS
Non-current assets
Intangibles 75 290 75 282
Property, plant and equipment 73 245 73 417
Investment property 3 143 3 825
151 678 152 524
Current assets
Restricted cash 1 648 1 648
Receivables 2 686 1 865
Cash and cash equivalents 7 079 12 514
11 413 16 027
Total assets
163 091 168 551
EQUITY AND LIABILITIES
Share capital 169 860 169 860
Reserves 26 256 24 059
(Accumulated loss)/ Retained
earnings (63 163) (44 320)
Equity attributable to equity
holders of the Group 132 953 149 599
Non-current liabilities
Provisions 1 335 1 335
Current liabilities
Loans from related parties 25 240 15 223
Accruals 165 81
Trade and other payables 3 398 2 313
28 803 17 617
Total liabilities 30 138 18 952
Total equity and liabilities 163 091 168 551
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Reviewed
six months six months
30 June 30 June
2013 2012
R’000 R’000
Cash receipts from customers - -
Cash paid to suppliers and
employees (14 734) (19 414)
Cash used in operations (14 734) (19 414)
Finance income 315 1 484
Finance costs (451) (478)
Cash utilised in operating
activities (14 870) (18 408)
Purchase of property, plant and
equipment (220) -
Proceeds from sale of financial
assets - 15 148
Acquisition of business net of
cash acquired - 35 309
Net cash effect of investing
activities (220) 50 457
Invested equity - 5 970
Loans advanced by related
parties 9 655 6 947
Net cash effect of financing
activities 9 655 12 917
Net cash change for the period (5 435) 44 966
Cash at the beginning of the
period 12 514 1 100
Net cash at the end of the
period 7 079 46 066
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Accumulated
Share loss/Retained Total
capital Reserves earnings equity
Reviewed R’000 R’000 R’000 R’000
Balance at
1 January 2012 - 1 415 40 128 41 453
Restated loss for -
the period - (45 531) (45 531)
Invested equity - - 5 970 5 970
Issue of shares
equity 169 860 - - 169 860
Restated BEE
transaction - 23 770 - 23 770
Restated balance as
at 30 June 2012 169 860 25 185 567 195 612
Reviewed
Balance at
1 January 2013 169 860 24 059 (44 320) 149 599
Loss for the period - - (18 843) (18 843)
Equity settled
employee share
option expense - 2 197 - 2 197
Balance at
30 June 2013 169 860 26 256 (63 163) 132 953
COMMENTARY
1. BASIS OF PREPARATION
The condensed consolidated interim financial statements are prepared and
presented in accordance with International Financial Reporting Standards
(“IFRS”), which include International Accounting Standard (“IAS”) 34
Interim Financial Reporting, the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee, the requirements of the
Companies Act of South Africa 2008 (Act 71 of 2008), as amended
(“Companies Act”) and the Listings Requirements of the JSE Limited
(“JSE”).
The accounting policies have been consistently applied with those
applied in the most recently audited financial statements, which are
supported by reasonable and prudent judgements and estimates.
The condensed consolidated interim financial statements do not include
all the information required for a full Annual Report in terms of IFRS
and should be read in conjunction with the Annual Report of the Group as
at 31 December 2012 and any public announcements made in terms of the
JSE Listings Requirements. However, selected explanatory notes are
included to explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last Annual Report for the year ended 31 December
2012.
The condensed consolidated interim financial statements are presented in
South African Rands and rounded to the nearest thousand.
These condensed consolidated interim financial statements were
authorised for issue by Goliath Gold's Board of Directors on
26 September 2013.
The condensed consolidated interim financial statements have been
prepared under the supervision of Mr Phillip Spencer (CA) SA, Vice
President: Finance.
On 5 July 2013, the Company appointed KPMG Inc., auditors of Goliath
Gold’s parent company, Gold One International Limited (“Gold One”), as
its external auditors, replacing PWC. KPMG Inc.’s designated partner
responsible for Goliath Gold is Mr Jacques Erasmus.
The condensed consolidated interim financial statements of Goliath Gold
for the six months ended 30 June 2013 have been reviewed by the
Company’s auditor, KPMG Inc., on which an unmodified review conclusion
was expressed. A copy of the report is available for inspection at the
Company’s registered office.
The audit report does not necessarily report on all of the information
contained in this financial report. Shareholders are therefore advised
that in order to obtain a full understanding of the nature of the
auditor’s engagement, they should obtain a copy of the auditor’s report
together with the accompanying financial information from the Company’s
registered office.
2. NATURE OF THE BUSINESS
Goliath Gold is a South African incorporated mining, exploration and
development company that holds prospecting rights over several
contiguous areas in the East Rand Basin of South Africa’s Witwatersrand
Basin in the Gauteng Province, as well as prospecting rights for heavy
minerals on the West Coast of South Africa. The Company has a primary
listing on the JSE, issuer code: GGM.
3. FINANCIAL AND OPERATIONAL PERFORMANCE
The Group continues to fund exploration expenses on the areas over which
it holds prospecting rights. Accordingly, the Group has incurred a loss
of R 18.8 million for the six months ended 30 June 2013 (restated six
months ended 30 June 2012: R 45.5 million).
4. PROSPECTS AND FUTURE PERFORMANCE
Goliath Gold is focused on creating value by exploring and developing
the Company’s exploration portfolio. During 2013, the Company’s primary
focus has been on further developing the substantial mineral resource
base at its Megamine Project in the East Rand, completing the desktop
modelling of the heavy mineral sands distribution at its Project
Elephant (“Project Elephant”) on the Western Cape Coast and finalising
the acquisition agreement with the joint provisional liquidators acting
on behalf of Pamodzi Gold East Rand Proprietary Limited (“Pamodzi”).
At the end of 2012, Goliath Gold declared an estimated mineral resource
of 12.19 million ounces of gold at its Megamine Project, which for the
first time included the Wit Nigel prospecting area. The total mineral
resource included indicated mineral resources of 3.64 million ounces
(25.62 million tonnes grading at 4.42 grams per tonne) and inferred
mineral resources of 8.56 million ounces (56.45 million tonnes grading
at 4.72 grams per tonne). Approximately 3.6 million ounces of the total
estimated mineral resource occur at depths shallower than 1,000 metres
below surface. Since the estimation of these mineral resources there
have been no material changes that would impact on the mineral resource
estimates. Further details relating to Goliath Gold’s mineral resources
can be found on the Company’s website, www.goliathgold.com, and in the
2012 Annual Report.
Three target areas were selected to be further progressed and advanced
during 2013. The three target areas were prioritised based on their
relatively shallow depth below surface, good grade potential, size and
accessibility. These areas include the Houtpoort Channel, Seven and Nine
Shaft Spaarwater extension and the Vlakfontein Black Reef, which forms
part of the Mapleton Basin. At Houtpoort, five surface exploration
boreholes were completed during the first half of 2013, coupled with
extensive surface and underground mapping as well as the completion of a
conceptual economic study. For the remainder of 2013, a further four
boreholes are planned to be completed and the conceptual study is to be
continued to a pre-feasibility study level. A single surface exploration
drill hole was completed at the Seven and Nine Shaft target. While this
drilling was deemed to be successful, due to the deeper nature of this
target (approximately 1,000 metres to 1,500 metres below surface),
further drilling during 2013 has been delayed. Surface mapping and
trenching was undertaken on the Black Reef target with drilling planned
for the second half of 2013. Further information and exploration results
are available on the Company’s website, www.goliathgold.com.
The geological and exploration target modelling at Project Elephant has
been largely completed utilising historical information. Future planned
activities include an aerial geophysical survey to identify and refine
priority drilling targets. The optimal time to undertake such a survey
is during the summer months and, as such, the survey has been planned
for either the last quarter of 2013 or the first quarter of 2014.
On 17 April 2012, Gold One and Goliath Gold announced that they had
entered into an R 70.0 million Acquisition Agreement with the joint
provisional liquidators representing Pamodzi and its subsidiaries to
acquire the Grootvlei Proprietary Mines Limited (“Grootvlei”) treatment
plant, selected Grootvlei surface assets (including primarily the
Grootvlei office complex), historical geological data, and the right to
apply for three prospecting rights. Gold One was to acquire the
treatment plant and surface assets together with the right to apply for
a prospecting right over the down-dip extensions to Gold One’s Modder
East Operations for R 65.0 million. Goliath Gold was to obtain the
remaining two prospecting rights and acquire historical mining and
geological data from Consolidated Modderfontein Mines 1979 Limited,
Consolidated Modderfontein Mines Limited, Nigel Gold Mining Company
Proprietary Limited and Grootvlei for R 5.0 million. On 7 August 2013,
Gold One and Goliath Gold announced that two of three prospecting
applications had been granted and that the acquisition of selected
surface assets by Gold One and underground mining and geological
information by Goliath Gold had been made unconditional. The third and
final prospecting right was granted on 12 September 2013.
The granting of these prospecting rights provides Goliath Gold with a
contiguous prospecting area in extent of 64,481 hectares in the East
Rand Basin; one of the most prolific historic gold producing regions in
South Africa. The contiguous prospecting area comprises the existing
Megamine Project and the recently awarded prospecting rights over
selected portions of the historic Pamodzi mining areas.
In December 2012, the Company applied for an exclusive prospecting
licence in Namibia. The prospecting licence submitted relates to the
Etendeka Project, a greenfield project situated in northern Namibia,
where potential gold, copper and phosphate mineralisation has been
identified. The Company is awaiting the successful granting of the
licence, which is anticipated during the last quarter of 2013.
The future exploration activities of Goliath Gold will remain focused on
enhancing the value of the Megamine mineral resources through the
appropriate application of economic studies to identify potential future
mineral reserves. The Company will also commence with regional
geological modelling and associated exploration activities in the newly
awarded historic Pamodzi mining areas. The combination of the existing
models at the Megamine Project and the extensive historic Pamodzi
information will be utilised to facilitate the identification of
priority exploration targets and fast-track target development. At
Project Elephant, the aerial geophysical survey is planned to be
completed during the fourth quarter of 2013 or first quarter of 2014.
5. GOING CONCERN
The condensed consolidated interim financial statements have been
prepared on the going concern basis using appropriate accounting
policies, supported by reasonable judgements and estimated. The going
concern basis implies that the Group will have adequate resources to
continue as a going concern for the foreseeable future.
It is noted that at 30 June 2013, the Group’s total assets exceed it
liabilities by R 133.0 million. The Group’s current liabilities,
however, exceed its current assets by R 17.4 million, which results in a
short term liquidity constraint.
As at 26 September 2013, the Group held cash and cash equivalents of
approximately R 5.6 million.
As the Group is a gold exploration company and does not currently have
cash generating assets, the continued exploration programme is funded
from available cash on hand and debt from the ultimate parent company,
Gold One. Gold One has confirmed its financial support of Goliath Gold
as and when additional funding is required to execute the exploration
programme. In turn Gold One has received financial support from its
ultimate holding company.
6. SEGMENTAL REPORTING
Management has determined the operating segments based on the reports
reviewed by the Executive Committee that are used to make strategic
decisions. The Executive Committee considers the business from a
functional perspective and has identified only one reportable segment,
namely, exploration. The Group currently operates in one geographical
location, being Southern Africa, and performs exploration activities.
Business Segment Information
Exploration
Reviewed
Reviewed restated
six months six months
30 June 30 June
2013 2012
R'000 R'000
Segment
revenue
Exploration - -
Loss forthe
period
Exploration (18 843) (45 531)
Reviewed Audited
30 June 31 December
2013 2012
Assets
Exploration 163 091 168 551
Liabilities
Exploration (30 138) (18 952)
7. CONTINGENCIES, LEGAL PROCEEDINGS AND GUARANTEES
Bank guarantees to the value of R 1.6 million (2012: R 1.6 million) have
been issued by a financial institution in favour of the Department of
Mineral Resources in order to secure the Group's rehabilitation
obligations in respect of its various prospecting rights.
Goliath Gold has identified a risk of potential long-term Acid Mine
Drainage ("AMD") on certain of its operations. AMD relates to the
acidification and contamination of naturally occurring water resources
by pyrite-bearing ore contained in underground mines and in rock dumps,
tailings dams and pits on the surface. Goliath Gold has not been able to
reliably determine the financial impact that AMD may have on the Group.
The Group has taken certain preventative actions as well as remedial
actions in an attempt to minimise the Group’s exposure to environmental
contamination.
8. EVENTS AFTER THE REPORTING PERIOD
On 17 April 2012, Goliath Gold announced that Goliath Gold and Gold One
had jointly entered into a R 70.0 million Acquisition Agreement with the
joint provisional liquidators representing Pamodzi and its subsidiaries
(“the Sellers”) to acquire the Grootvlei treatment plant, selected
Grootvlei surface assets (including primarily the Grootvlei office
complex), historical geological data, and the right to apply for three
prospecting rights. Gold One was to acquire the treatment plant and
surface assets together with the right to apply for a prospecting right
over the down-dip extensions to Gold One’s Modder East Operations for R
65.0 million. Goliath Gold was to obtain prospecting rights and acquire
historical mining and geological data from Consolidated Modderfontein
Mines 1979 Limited, Consolidated Modderfontein Mines Limited, Nigel Gold
Mining Company Proprietary Limited and Grootvlei for R 5.0 million.
On 7 August 2013, Gold One and Goliath Gold announced that two of three
prospecting applications had been granted (one of which pertained to
Gold One and the other to Goliath Gold) and that, in addition, the
acquisition of selected surface assets by Gold One and underground
mining and geological information by Goliath Gold had been made
unconditional. The third and final prospecting right was granted to
Goliath Gold on 12 September 2013.
9. PRIOR PERIOD ERROR
The Group reported a Black Economic Empowerment ("BEE") share based
payment expense of R 31.9 million in the condensed consolidated interim
financial statements for the six months ended 30 June 2012. The
valuation of this charge was based on the number of options granted to
the BEE partners in order to meet the South African Mining Charter
requirements of 26% black ownership by 2014. These share option
arrangements will be settled by obtaining an equity interest of the
Group's mining operations.
At 31 December 2012, an error was identified in certain assumptions
applied in the calculation of the BEE charge. This amount was correctly
stated in the 31 December 2012 Annual Report as R 23.8 million. This
amendment results in a restatement of the BEE charge recognised in the
30 June 2012 comparative figures. There was no impact on the opening
statement of financial position. No third statement of financial
position is therefore presented.
It is important to note that IFRS allowed for the correction of the
error for the 31 December 2012 financial year end without having to
report a prior period error as it occurred during the same financial
year. For purposes of the condensed consolidated interim financial
statements for the six months ended 30 June 2013, the 30 June 2012
comparative period was required to be restated.
The correction of the error results in an adjustment as follows:
Reviewed Previously
30 June 2013 reported Adjustment Restated
Profit or Loss R’000 R’000 R’000
Black Economic
Empowerment
transactions 31 897 (8 127) 23 770
10. DIVIDENDS
No dividends or distributions were declared or paid to shareholders (30
June 2012 – R nil).
11. ASSET VALUE PER SHARE
Reviewed Audited
30 June 31 December
2013 2012
R’000 R’000
Net asset value per share (cents) 90 102
Net tangible asset value per share
(cents) 39 50
The net asset value and the net tangible asset value per share at 30
June 2013 is based on the total number of shares in issue of 147 354 905
(2012: 147 354 905).
12. COMPETENT PERSON’S STATEMENT
There have been no material changes to the Company’s estimated mineral
resources as declared at December 2012. On-going exploration results are
continuously monitored and will be utilised to update the existing
mineral resources upon successful completion of the planned exploration
activities.
The overall competent person for Goliath Gold is Mr Quartus Meyer. The
information in these condensed consolidated interim financial statements
that relates to exploration results is based on information compiled by
Mr Meyer for the purposes of the South African Code for Reporting of
Exploration Results, Mineral Resources and Mineral Reserves (“SAMREC
Code”). The information in these condensed consolidated interim
financial statements 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 these condensed
consolidated interim financial statements of the matters based on
information compiled by themselves in the form and context in which they
appear.
13. DIRECTORATE
During the reporting period, acting Chief Executive Officer, Dr Richard
Stewart, was appointed as Chief Executive Officer with effect from
1 January 2013. Mr Mark Wheatley resigned as a Chairman and non-
executive director with effect from 30 April 2013 and Mr Piet Nel was
appointed as the independent non-executive Chairman with effect from 30
April 2013.
On 21 August 2013, Goliath Gold’s majority shareholder, Gold One,
announced that it had entered into an agreement with Sibanye Gold
Limited (“Sibanye Gold”) to merge its 74% shareholding in and claims
against Newshelf 1114 Proprietary Limited, which holds a 100%
shareholding in Rand Uranium Proprietary Limited – being the Cooke 1-3
Underground Operations and Randfontein Surface Operations – and, which
will also hold 100% of Ezulwini Mining Company Proprietary Limited
after an internal restructuring – being the Cooke 4 Underground
Operation – in exchange for a 17% interest in the fully diluted share
capital of Sibanye Gold through the issue of new ordinary shares.
Conclusion of the transaction is not yet certain and remains subject to,
inter alia, Chinese regulatory approvals, Sibanye Gold shareholder
approval, Competition Commission approval and Section 11 approval from
the Minister of Mineral Resources. Should the transaction be approved
and completed, Goliath Gold Chief Executive Officer, Richard Stewart,
who is also Executive Vice President: Technical Services for Gold One,
is expected to become a fulltime employee of Sibanye Gold and will
therefore resign from his position as Chief Executive Officer of Goliath
Gold.
The Goliath Gold Board is proactively considering potential candidates
to serve as Chief Executive Officer pending the outcome of the above-
mentioned transaction and a further announcement will be made in this
regard.
Approved on behalf of the Board
Richard Stewart Christopher Chadwick
Chief Executive Officer Chief Financial Officer
Johannesburg
27 September 2013
Directors:
P Nel*(Chairman), R Stewart (Chief Executive Officer), C Chadwick (Chief
Financial Officer), K Rayner*, J Vilakazi*,
*Independent Non-executive
REGISTERED OFFICE
Constantia Office Park, Bridgeview House, Ground Floor
Corner 14th Avenue and Hendrik Potgieter Street, Weltevreden Park, 1709.
South Africa
COMPANY SECRETARY
Pierre Kruger
Constantia Office Park, Bridgeview House, Ground Floor
Corner 14th Avenue and Hendrik Potgieter Street, Weltevreden Park, 1709.
South Africa
SPONSOR
Merchantec Capital
AUDITORS
KPMG Inc.
Date: 27/09/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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