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Reviewed Condensed Consolidated Interim Financial Results For The Six Months Ended 30 June 2014
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 2014
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Reviewed Reviewed
six months six months
ended ended
30 June 30 June
Change 2014 2013
% R’000 R’000
Other income (100) - 1 500
General and
administrative expenses (6) (7 711) (8 168)
Exploration and pre-
feasibility expenditure 90 (16 741) (8 820)
Employee share option (26) (1 616) (2 197)
Settlement costs 100 (3 500) -
Fair value adjustments (100) - (682)
Operating loss (29 568) (18 367)
Finance income (73) 84 315
Finance costs 160 (2 113) (813)
Loss before taxation (31 597) (18 865)
Income taxation (100) - 22
Loss for the period (31 597) (18 843)
Other comprehensive
income - -
Total Comprehensive
Income for the Period 68 (31 597) (18 843)
Reviewed Reviewed
six months six months
ended ended
30 June 30 June
2014 2013
Total number of
ordinary shares issued 147 354 905 147 354 905
Weighted average number
of ordinary shares in
issue 147 354 905 147 354 905
Basic loss per share
(cents) (21) (13)
Diluted loss per share
(cents) (21) (13)
Headline loss per share
(unaudited)(cents) (21) (12)
Diluted headline loss
per share (unaudited)
(cents) (21) (12)
Six months Six months
ended ended
30 June 30 June
2014 2013
R’000 R’000
Reconciliation of Headline Loss
Loss attributable to owners of the company (31 597) (18 843)
Fair value adjustment - 682
Headline Loss (31 597) (18 161)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
as at as at
30 June 31 December
2014 2013
R’000 R’000
ASSETS
Non-current assets
Property, plant and equipment 78 259 78 612
Intangible assets 75 693 75 296
Investment property 3 010 3 010
156 962 156 918
Current assets
Loans to related parties 1 813 17
Receivables 2 154 378
Restricted cash 1 628 1 628
Cash and cash equivalents 654 4 298
6 249 6 321
Total assets 163 211 163 239
EQUITY AND LIABILITIES
Share capital 169 860 169 860
Reserves 31 671 31 150
Accumulated loss (118 406) (87 904)
83 125 113 106
Non-current liabilities
Provision for environmental
rehabilitation 1 391 1 391
Current liabilities
Loans from related parties 64 473 38 827
Trade and other payables 10 009 9 492
Provisions 3 500 -
Employee related accruals 713 423
78 695 48 742
Total equity and liabilities 163 211 163 239
Net asset value per share
(unaudited)(cents) 56 77
Net tangible asset value per
share (unaudited) (cents) 5 26
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (REVIEWED)
Share Accumulated Total
capital Reserves loss equity
R’000 R’000 R’000 R’000
Balance at
01 January 2013 169 860 24 059 (44 320) 149 599
Loss for the period - - (18 843) (18 843)
Other comprehensive
income - - - -
Total comprehensive
income for the period - - (18 843) (18 843)
Transactions with
owners in their
capacity as owners,
recognised directly in
equity
Equity settled employee
share option expenses - 2 197 - 2 197
Total transactions with
owners in their
capacity as owners - 2 197 - 2 197
Balance at 30 June 2013 169 860 26 256 (63 163) 132 953
Balance at 01 January
2014 169 860 31 150 (87 904) 113 106
Loss for the period - - (31 597) (31 597)
Other comprehensive
income - - - -
Total comprehensive
income for the period - - (31 597) (31 597)
Transactions with
owners in their
capacity as owners,
recognised directly in
equity
Equity settled employee
share option expenses - 1 616 - 1 616
Share options (recycle
options of employees
resigned) - (1 095) 1 095 -
Transactions with
owners in their
capacity as owners - 521 1 095 1 616
Balance at 30 June 2014 169 860 31 671 (118 406) 83 125
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Reviewed
six months six months
ended ended
30 June 30 June
2014 2013
R’000 R’000
Cash utilised in operating
activities (23 982) (14 870)
Net cash from investing
activities (1 400) (220)
Net cash from financing
activities 21 738 9 655
Net decrease in cash and cash
equivalents (3 644) (5 435)
Cash and cash equivalents at
the beginning of the period 4 298 12 514
Cash and cash equivalents at
end of the period 654 7 079
COMMENTARY
1. BASIS OF PREPARATION
The condensed consolidated interim financial statements for the six
months ended 30 June 2014 are prepared in accordance with the JSE
Listings Requirements for interim reports and the requirements of the
Companies Act, 2008 (Act 71 of 2008), as amended. The JSE Listings
Requirements require interim reports to be prepared in accordance with
the framework concepts and the measurement and recognition requirements
of International Financial Reporting Standards (“IFRS”) and the SAICA
Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Reporting Pronouncements as issued by Financial
Reporting Standards Council and to also, as a minimum, contain the
information required by IAS 34 – Interim Financial Reporting. The
accounting policies applied in the preparation of the condensed
consolidated interim financial statements are in accordance with IFRS
and are consistent with those applied in the previous consolidated
annual financial statements.
The condensed consolidated interim financial statements for the six
months ended 30 June 2014 do not include all the information required
for audited financial statements in terms of IFRS and should be read in
conjunction with the audited financial statements of the Group for the
year ended 31 December 2013 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 audited financial statements for the year
ended 31 December 2013.
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 (“Board”) on
10 September 2014.
The condensed consolidated interim financial statements have been
prepared under the supervision of Phillip Spencer CA(SA).
The condensed consolidated interim financial statements of Goliath Gold
for the six months ended 30 June 2014 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 review 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 review
report together with the accompanying condensed consolidated interim
financial statements from the Company’s registered office.
2. NATURE OF THE BUSINESS
Goliath Gold is a South African incorporated mining, exploration and
development company listed on the JSE, issuer code GGM. As at the
release of these condensed consolidated interim financial statements,
the Group holds six gold prospecting rights and one gold new order
mining right for contiguous areas in extent of 62 540 hectares within
South Africa’s East Rand Basin in the Gauteng Province. The Group also
holds eight prospecting rights for heavy minerals and rare earths over
eight contiguous areas in South Africa’s Western Province, known as
Project Elephant, totalling in excess of 32 467 hectares, and for which
renewal applications were submitted on 25 July 2014. During the six
months under review, the Group submitted seven gold mining permit
applications for additional areas, known as Project Phoenix, contiguous
to its existing East Rand Basin prospecting rights. Six of the seven
applications have been accepted by the Department of Mineral Resources
and are awaiting approval; the seventh application is expected to be
accepted shortly. The Group is also awaiting the granting of an
exclusive prospecting license for gold over a greenfield project area in
Etendeka, Namibia.
The operating results and state of affairs of the Group are fully set
out in the condensed consolidated interim financial statements and do
not, in the Board’s opinion, require any further comment.
The Group continues to fund exploration expenses on the areas over which
it holds prospecting rights. Accordingly, the Group has incurred a loss
of R31.6 million for the six months ended 30 June 2014 (six months ended
30 June 2013: R18.8 million).
3. PROSPECTS AND FUTURE PERFORMANCE
With effect from 16 May 2014, Dale Richards joined Goliath Gold as Chief
Executive Officer and executive director of Goliath Gold following the
resignation of Richard Stewart with effect from 15 May 2014. Dale has
more than 15 years’ experience in the mining industry, having worked for
various companies including Gold Fields and Great Basin Gold. A Geology
Honours graduate, Dale also holds a graduate diploma in mining
engineering and has extensive experience across Sub Saharan Africa in
project evaluation and due diligence studies. While having previously
focused predominantly on gold, Dale also has experience in commodities
such as phosphates, manganese, coal and base metals.
Goliath Gold’s exploration strategy continues to be driven by the
findings of the East Rand Target Areas (“ERTA”) Project initiated in
2013. The ERTA Project comprises the continual evaluation and ranking of
all Goliath Gold projects according to their anticipated lead time and
ease of getting into production. By prioritising potential near-term
projects, Goliath Gold will be able to generate cash flows and
shareholder value in the shortest possible timeframe.
As at the release of this report, the Group’s consolidated resources and
reserves remain as stated in the 2013 integrated annual report,
published on 31 March 2014. Mineral resources are estimated at 10.68
million ounces (including 64.80 million tonnes grading at 5.12 grams per
tonne) consisting of indicated mineral resources of 3.21 million ounces
(including 21.42 million tonnes grading at 4.64 grams per tonne) and
inferred mineral resources of 7.47 million ounces (including 43.38
million tonnes grading at 5.35 grams per tonne).
4. COMPETENT PERSON’S STATEMENT
There have been no material changes to the Company’s estimated mineral
resources as declared in December 2013. 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 information in these condensed consolidated interim financial
statements that relates to exploration results, mineral resources or ore
reserves is based on information compiled by the following Competent
Persons for the purposes of the South African Code for Reporting of
Exploration Results, Mineral Resources and Mineral Reserves (“SAMREC
Code”).
The overall Competent Person for Goliath Gold is Mr Sean Meadon. The
information contained herein which relates to exploration results is
based on information compiled by Mr Meadon and the information which
relates to mineral resources is based on information compiled by Dr
Carina Lemmer.
Mr Meadon has a master’s degree in science (geology) and is a
professional natural scientist registered with the South African Council
for Natural Scientific Professions (“SACNASP”) membership number
400243/09. Mr Meadon is Geology Manager: Projects and is a full time
employee of Gold One International Limited (“Gold One”), which has
entered into a management agreement with Goliath Gold. Mr Meadon has
24 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.
Dr Lemmer has a doctorate in applied earth sciences (geostatistics) and
is a professional natural scientist registered with SACNASP, membership
number 400021/03. Dr Lemmer is an independent consultant to Goliath Gold
and has been an independent consultant to the South African mining
industry for the past 24 years. Dr Lemmer has 36 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 Meadon 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.
These condensed consolidated interim financial statements use the terms
“indicated resources” and “inferred resources” as defined in accordance
with the SAMREC Code, prepared by the South African Mineral Resource
Committee under the auspices of the South African Institute of Mining
and Metallurgy (“SAIMM”), effective March 2000 or as amended from time
to time. The use of these terms in these condensed consolidated interim
financial statements is consistent with the definitions of the SAMREC
Code.
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 estimates. The going
concern basis contemplates that Goliath Gold and its subsidiaries will
have adequate resources to continue as going concerns for the
foreseeable future.
We note that at 30 June 2014, the Group’s total assets exceed its
liabilities by R83.1 million. The Group incurred a loss for the period
of R31.6 million. At 30 June 2014, the Group’s current liabilities
exceeds its current assets by R72.4 million (31 December 2013:
R42.4 million).
As at 10 September 2014 the Group held a cash balance of R0.4 million.
However, 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 with shareholder
debt from the 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.
Gold One’s major shareholder, Baiyin Non-Ferrous Group Co Limited
(“Baiyin”), a company incorporated in the People’s Republic of China,
has supported Gold One through unsecured shareholder loans. Baiyin has
provided a letter of support to provide further shareholder funding to
Gold One. This letter of support underpins the letter of support granted
to Goliath Gold by Gold One.
6. SEGMENT INFORMATION
Management has determined the operating segments based on the reports
reviewed by the Executive Committee that are used to make strategic
decisions. The 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.
Reviewed Reviewed
six months six months
ended ended
30 June 30 June
2014 2013
R’000 R’000
Segment revenue
Exploration - -
- -
Comprehensive loss for the
period
Exploration (31 597) (18 843)
(31 597) (18 843)
Reviewed Audited
as at as at
30 June 31 December
2014 2013
R’000 R’000
Assets
Exploration 163 211 163 239
163 211 163 239
Liabilities
Exploration (80 086) (50 133)
(80 086) (50 133)
7. EVENTS AFTER THE REPORTING PERIOD
All conditions relating to the acquisition of Pamodzi East Rand
Operations prospecting rights and related historical geological data
became effective on 1 September 2014 and the outstanding balance of
R4.5 million was settled on the same day.
8. PROVISIONS
In August 2005, the Company entered into an agreement with Covenant
Mining and Finance (SA) Proprietary Limited (“Covenant”) and White Water
Gold Proprietary Limited (“WWG”), a company in which Covenant owns a
controlling interest, in terms of which the Company sold its Wit Nigel
Prospecting Right (“Prospecting Right”) to WWG in exchange for a 35%
interest in WWG (“the Agreement”). This sale was subject to certain
conditions precedent including the consent of the Minister of Mineral
Resources (“Minister”) to the cession of the Prospecting Right
(“Suspensive Condition”).
The Minister refused to consent to the cession of the Prospecting Right
until such time that WWG furnished proof of its financial ability to
fund the prospecting works programme. WWG was unable to provide proof of
its financial ability.
In May 2012, the Company placed WWG on terms to provide proof of its
financial ability and when it failed to do so, the company cancelled the
Agreement. Accordingly, the intended transfer of the Prospecting Right
to WWG did not proceed and the Company remained the holder of the
Prospecting Right.
On 10 April 2014, Covenant and WWG issued summons against the Company
claiming a declaratory order that the Suspensive Condition be deemed to
have been fulfilled and that the Agreement be declared unconditional and
presently of full force and effect.
The Company duly entered an appearance to defend the action.
On 19 May 2014, the parties entered into an “in principle” settlement
agreement. The effect of the settlement agreement is that:
- the action instituted by Covenant and WWG against the Company will be
withdrawn;
- the Company will acquire three prospecting rights adjacent to its
Prospecting Right held by White Water Westward Exploration Proprietary
Limited, a company controlled by Covenant;
- the Company will make payment to Covenant and WWG of an amount of R3.5
million; and
- neither party will have any further claim against the other arising
from the Agreement.
Covenant, WWG and the Company are currently engaged in discussions
regarding the structure and form of the settlement agreement so as to
give effect to the “in principle” agreement.
9. DIVIDENDS
No dividends were declared or paid to shareholders during the period
(2013: Rnil).
10. DIRECTORATE
Dr Richard Stewart resigned as Chief Executive Officer on 15 May 2014,
following which Dale Richards was appointed as his replacement effective
from 16 May 2014.
For and on behalf of the Board
Dale Richards Christopher Chadwick
Chief Executive Officer Chief Financial Officer
Johannesburg
10 September 2014
Directors:
P Nel* (Chairman), D Richards (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 Road, Weltevreden Park, 1709
COMPANY SECRETARY
Pierre Kruger
Constantia Office Park, Bridgeview House, Ground Floor, Corner 14th
Avenue and Hendrik Potgieter Road, Weltevreden Park, 1709
SPONSOR
Merchantec Capital
AUDITORS
KPMG Inc
Date: 10/09/2014 12:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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