Wrap Text
Unaudited interims for the period ended 30 September 2013
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
SEPTEMBER 30, 2013 AND 2012
(Expressed in Canadian Dollars)
Consolidated Financial Statements
For the period ended September 30, 2013 and September 30, 2012
(Expressed in Canadian Dollars)
Index Page
Management’s Responsibilities 3
Notice of No Auditor review 4
Consolidated Statements of Financial Position 5
Consolidated Statements of Comprehensive Loss 6
Consolidated Statements of Changes in Shareholders’ Equity 7
Consolidated Statements of Cash Flows 8
Notes to Consolidated Financial Statements 9 – 21
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)
September 30, December 31,
2013 2012
$ $
Assets
Current
Cash and cash equivalents 112,577 1,852,133
Term deposit (Note 4) 563,872 1,550,000
Restricted cash (Note 5) 100,000 200,000
Amounts receivable 220,076 75,499
Prepaids 74,412 31,472
1,070,937 3,709,105
Equipment (Note 6) 80,199 94,048
Exploration and evaluation assets (Note 8) 3,976,841 3,121,836
Investment jointly controlled entity Rock Island 5,680,292 5,680,292
10,808,269 12,605,281
Liabilities
Current
Accounts payable and accrued liabilities 541,283 465,242
Due to related parties (Note 13) 72,787 6,000
614,070 471,242
Shareholders’ Equity
Share capital (Note 10) 17,278,342 16,910,654
Contributed surplus 4,518,646 4,440,908
Warrants 4,372,660 4,372,660
Non-controlling interest (13,048) (13,048)
Deficit (15,962,400) (13,577,134)
10,194,199 12,134,040
10,808,269 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. 5
Giyani Gold Corporation
Condensed Consolidated Statements of Loss and Comprehensive Loss
(Expressed in Canadian dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
2013 2012 2013 2012
$ $ $ $
Expenses
Amortization 4,616 4,395 13,849 12,048
Investor Relations 16,500 46,000 79,896 131,950
Conferences and business development 5,467 7,032 29,802 68,447
General exploration 5,018 7,500 5,119 12,098
Management and consulting 323,555 346,897 1,044,127 1,024,319
Office and rent 87,905 50,243 236,302 146,845
Share-based payments - 1,349,775 77,738 1,349,775
Professional fees 54,966 53,143 241,893 249,385
Telephone and internet 9,783 9,518 35,031 39,477
Transfer agent and filing fees (9,896) 11,115 594,870 38,818
Travel 53,464 48,206 168,792 131,329
Loss Before Interest and Other Items 551,378 1,933,823 2,527,418 3,204,490
Other Items
Foreign exchange loss (gain) 141,724 35,054 (28,822) 51,304
Interest and other income (69,258) (2,251) (200,517) (12,755)
Taxes 68,408 87,187
140,875 32,803 (142,152) 38,549
Net Loss and Comprehensive loss for the
year 692,253 1,966,626 2,385,266 3,243,038
Loss per share (basic and diluted) 0.01 0.04 0.04 0.08
Weighted average number of common
shares outstanding 54,978,578 41,392,305 54,571,440 40,577,457
See notes to the consolidated financial statements. 6
Giyani Gold Corporation
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Expressed in Canadian dollars)
(Unaudited)
Nine Months ended September 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 - - - - - (2,385,266) (2,385,266)
Balance, September 30, 2013 54,978,578 $ 17,278,342 $ 4,518,646 $ 4,372,660 $ (13,048) $ (15,962,400) $ 10,194,199
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 1,675,625 553,946 - - - - 553,946
Shares issued on exercise of
options 390,500 105,350 - - - - 105,350
Stock-based payments 250,000 325,000 1,349,775 1,674,775
Net loss and Comprehensive loss - - - - - (3,243,038) (3,243,038)
Balance, September 30, 2012 41,675,219 $ 11,699,074 $ 4,361,157 - 48,000 $ (11,287,409) $ 4,820,822
See notes to the consolidated financial statements. 7
Giyani Gold Corporation
Condensed Consolidated Statements of Cash Flows
For the period ended September 30, 2013, and 2012
(Expressed in Canadian dollars)
(Unaudited)
Nine Months Nine Months
Ended Ended
September September
2013 2012
$ $
Operating Activities
Net loss for the period (2,385,266) (3,243,038)
Adjustment for items not involving cash
Amortization 13,849 12,048
Share-based payments 77,738 1,349,775
(1,881,215)
Changes in non-cash working capital
Amounts receivable (144,577) 210,322
Subscription receivable - 49,750
Prepaids (42,940) (157,064)
Accounts payable and accrued liabilities 76,041 (172,974)
Due to related parties 66,787 (608,168)
Cash used in operating activities (2,338,369) (2,559,349)
Investing Activities
Deferred acquisition costs - 21,675
Advances to Rock Island (622,700)
Redemption (purchase) of term deposit 986,128 (773,125)
Restricted Cash 100,000
Purchase of equipment - (43,685)
Exploration and evaluation asset
expenditures (655,505) (1,325,770)
Cash used in investing activities 430,623 (2,743,605)
Financing Activities
Proceeds from conversion of warrants
and options 168,188 659,296
Proceeds from issuance of shares (net of
costs) - 2,734,803
Cash provided by financing activities 168,188 3,394,099
Total (Outflow) inflow of cash (1,739,559) (1,908,855)
Cash, beginning of year 1,852,135 2,074,158
Cash, end of year 112,577 165,303
See notes to the consolidated financial statements. 8
Giyani Gold Corporation
Notes to the Condensed Consolidated Financial Statements
September 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 of $ 692,253 or $0.01 per share for the three month period
ended September 30, 2013 versus $ 1,966,626 in the same period in 2012 and had an
accumulated deficit of $ 15,962,400 at September 30, 2013 (December 31, 2012 - $13,577,134).
Year to date, the Company reported a net loss of $ 2,385,266 versus $ 3,243,038 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.
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. As at the date of this MD&A, the transaction
has not closed.
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 September 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
9
Giyani Gold Corporation
Notes to the Condensed Consolidated Financial Statements
September 30, 2013
(Expressed in Canadian dollars, unless otherwise stated)
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 November 11, 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 98.1% 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.
10
Giyani Gold Corporation
Notes to the Condensed Consolidated Financial Statements
September 30, 2013
(Expressed in Canadian dollars, unless otherwise stated)
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.
11
Giyani Gold Corporation
Notes to the Condensed Consolidated Financial Statements
September 30, 2013
(Expressed in Canadian dollars, unless otherwise stated)
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 $ 563,872 (2012 – $1,550,000). The
term deposit is redeemable in November 2013 and earns interest of approximately 1.35% (2012 –
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
$ 100,000. The financial institution holds a $100,000 (2012- $200,000) 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.
12
Giyani Gold Corporation
Notes to the Condensed Consolidated Financial Statements
September 30, 2013
(Expressed in Canadian dollars, unless otherwise stated)
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 $ 94,048
Additions - - - - -
Depreciation 2,777 4,422 3,975 2,675 13,849
Balance, September 30, 2013 $ 23,141 $ 29,976 $ 11,926 $ 15,157 $ 80,199
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
September 30, 2013 Giyani has recorded a deposit of $15,018 (2012- nil) included in exploration
and evaluation assets.
13
Giyani Gold Corporation
Notes to the Condensed Consolidated Financial Statements
September 30, 2013
(Expressed in Canadian dollars, unless otherwise stated)
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 267,200 354,523 195,034 121,797 709,188 - 1,647,742
Exploration South Africa - - - - - 1,638,020 1,638,020
Asset write-down - - - - (1,046,058) - (1,046,058)
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 22,347 8,004 221,963 - - 252,314
Exploration South Africa - - - - - 602,691 602,691
Balance, September 30, 2013 $ 289,547 $ 362,527 $ 785,109 $ 298,947 $ 0 $ 2,240,711 $ 3,976,841
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%.
14
Giyani Gold Corporation
Notes to the Condensed Consolidated Financial Statements
September 30, 2013
(Expressed in Canadian dollars, unless otherwise stated)
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 USD $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 September 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 September 30, 2013 54,978,578 17,278,342
15
Giyani Gold Corporation
Notes to the Condensed Consolidated Financial Statements
September 30, 2013
(Expressed in Canadian dollars, unless otherwise stated)
Share option activities for the periods ended September 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 400,000 $1.30 (459,500) $1.47
Outstanding and exercisable –
end of year 2,700,000 $1.54 3,350,000 $1.43
Weighted
Average
Remaining
Contractual Exercise
Expiry Date Life in Years Price 2013 2012
July 15, 2015 - $ 0.15 250,000
November 3, 2015 2.09 $ 1.30 500,000 575,000
June 24, 2016 2.73 $ 2.00 450,000 450,000
July 25, 2016 2.82 $ 2.31 250,000 325,000
August 30, 2016 2.92 $ 2.35 75,000 75,000
July 11, 2017 3.78 $1.30 1,325,000 1,575,000
October 18, 2017 4.05 $1.30 100,000 100,000
2,700,000 3,350,000
16
Giyani Gold Corporation
Notes to the Condensed Consolidated Financial Statements
September 30, 2013
(Expressed in Canadian dollars, unless otherwise stated)
11. WARRANTS
Warrants
The following table summarizes the number of common shares reserved pursuant to warrant
activities during the period ended September 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 1,075,456 1.40 (39,371) $0.85
Outstanding and exercisable –
end of year 4,671,876 $0.85 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
October 26, 2014 1.07 $ 0.85 4,671,876 4,825,626
4,671,876 5,901,082
12. RELATED PARTY TRANSACTIONS
Management and consulting fees of $ 559,005 (2012 - $526,870) 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 - $1,349,775) were
expensed.
The Company incurred services of $ 154,730 in 2013 (2012 - $ 219,977 ) from McCarthy Tétrault
LLP and $ 84,597 from Caledonian Consultancy, law firms where one of the Company’s
Directors is a Partner.
At September 30, 2013, the Company owed $ 72,787 (2012 - $Nil) to related parties.
The Company is a 28.8% shareholder in jointly controlled entity Rock Island Trading (Pty) Ltd
located in South Africa.
17
Giyani Gold Corporation
Notes to the Condensed Consolidated Financial Statements
September 30, 2013
(Expressed in Canadian dollars, unless otherwise stated)
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.
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
For the period ending September 30, 2013 Ontario Mining SA Mining Corporate
Property and Equipment 80,199
Exploration and Evaluation 1,536,630 2,240,711 199,500
Total Assets 1,546,981 7,941,936 1,319,352
Total Liabilities 76,100 359,025 178,944
Total Loss 69,960 690,088 1,625,218
Net Additions exploration and evaluation assets 52,814 602,691 199,500
Impairment to exploration and evaluation assets - - -
For the period ending September 30, 2012 Ontario Mining SA Mining Corporate
Property and Equipment - - 96,143
Exploration and Evaluation 2,207,904 - -
Total Assets 2,269,858 381,236 2,411,691
Total Liabilities 10,524 - 231,439
Total Loss 29,595 49,387 3,164,056
Net Additions exploration and evaluation assets 279,182 - -
Impairment to exploration and evaluation assets - - -
18
Giyani Gold Corporation
Notes to the Condensed Consolidated Financial Statements
September 30, 2013
(Expressed in Canadian dollars, unless otherwise stated)
15. COMMITMENTS
The Company has committed to approximately $1,088,758 over the next 5 years for obligations
under operating leases, rent, exploration and option payments.
2013 2014 2015 2016 2017
Exploration commitments 165,814 407,500 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 287,592 537,743 152,743 102,743 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
In September 2011 the Company and 2299895 executed an option agreement (the “UCEL
Agreement”) with Upper Canada Explorations Limited (the “Optionor”), an arm’s length party,
whereby 2299895 has a right to earn a 100% interest in certain surface and mineral rights (the
“Abbie Lake Property”) near Sault. Ste. Marie, Ontario, Canada. The Company paid 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 (paid October 2012) and $50,000 within 24 months of the
Approval Date. The Company issued 200,000 common shares in the capital stock of 2299895
Ontario Inc. (“2299895”) within 10 days of the Approval Date. The Company issued 150,000
common shares in the capital stock of 2299895 on the first anniversary of the Approval Date, and
150,000 common shares in the capital stock of 2299895 will be issued on the second anniversary
of the Approval Date.
In April 2013, 350,000 shares of 2299895 held by the Optionor were cancelled and converted to
350,000 shares in the Company.
2299895 must pay Michael Tremblay and Jacques Robert (collectively “Tremblay/Robert”) a 3%
NSR on ore and a 3% GOR on gemstones and diamonds covered under the UCEL Agreement,
provided however that the Company may purchase 1.5% of the NSR at any time upon 30 days’
notice in writing in consideration for the sum of $1,500,000. 2299895 must pay Trelawney Mining
and Exploration Inc. a 2% NSR on the sale or disposition of minerals covered under the UCEL
Agreement, provided however that the Company may purchase 1.5% of the NSR at any time
upon 30 days’ notice in writing in consideration for the sum of $750,000.
The UCEL Agreement also states a minimum 2011 work commitment for 2299895 in the amount
of $300,000 (“Initial Work Program”), a minimum work commitment of $700,000 by the end of the
first anniversary of the Approval Date and a total work commitment of $2,000,000 by the end of
the second anniversary of the Approval Date. This provision has been amended by letter
agreement dated November 14, 2011, between the parties such that the Initial Work Program in
the amount of $300,000 must be completed by April 30, 2012 (this initial phase payment has
been satisfied), a work commitment of $700,000 must be completed by April 30, 2013 and a total
work commitment of $2,000,000 by April 30, 2014.
19
Giyani Gold Corporation
Notes to the Condensed Consolidated Financial Statements
September 30, 2013
(Expressed in Canadian dollars, unless otherwise stated)
Pursuant to an amending agreement dated January 23, 2013, the Company renegotiated the
Initial Work Program such that $600,000 must be incurred prior to December 31, 2013 and a total
of $1,000,000 must be incurred by December 31, 2014. To date $434,186 of eligible expenses
have been incurred against the initial work program. In addition, pursuant the January 23, 2013
amending agreement, UCEL has agreed that all future obligations pursuant to the UCEL
Agreement shall be those jointly of 2299895 and C Level with the intention that all future
issuances of shares and warrants will be subject to a similar adjustment as identified in the
Definitive Agreement
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 an 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 East Property
On March 21, 2012, 2299895 executed an agreement (the “Keating East Agreement”) with
2099840 Ontario Inc trading as Emerald Geological Services (the “Emerald”), an arm’s length
party, to have Emerald release 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 and then to have these lands included in the licensing agreement
with the Licensor.
The agreement entitles Emerald to release completely its interest in Lands from the Licensor and
to have 299895 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. The total current value of the maximum consideration payable if all conditions
are satisfied is $426,600. Under the terms of the agreement, Emerald has agreed to relinquish its
license and rights in the Lands and to allow 2299895 to acquire its interest and rights in the Lands
20
Giyani Gold Corporation
Notes to the Condensed Consolidated Financial Statements
September 30, 2013
(Expressed in Canadian dollars, unless otherwise stated)
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.
Pursuant to an amendment agreement dated August 12, 2013, between 2299895 and Emerald,
Emerald has confirmed that all future obligations pursuant to the Keating East Agreement shall be
jointly those of 2299895 and C Level and has agreed to extend the date for payment of the
$25,000 in consideration payable to on or before December 31, 2013 and has confirmed that the
Resulting Issuer, following the completion of the Proposed QT, will be responsible for the
payment of all cash payments and the 50,000 shares to be issued pursuant to the Keating East
Agreement. The number of shares to be issued to Emerald is 50,000 Resulting Issuer Shares
pursuant to the Emerald Securities Exchange Agreement
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.
28 Novembe 2013
Johannesburg
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
21
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