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Giyani - September 2014 interim results
Giyani Gold 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”)
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
FOR THE PERIOD ENDED SEPTEMBER 30, 2014
1
NOTICE OF NO AUDITOR REVIEW OF
CONDENSED CONSOLIDATED 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 consolidated interim financial statements, they must be accompanied by a
notice indicating that an auditor has not reviewed the financial statements.
The accompanying unaudited condensed consolidated interim financial statements of the Company
have been prepared by and are the responsibility of the Company’s management.
The Company’s independent auditor has not performed a review of these financial statements in
accordance with standards established by the Canadian Institute of Chartered Accountants for a review
of interim financial statements by an entity’s auditor.
2
GIYANI GOLD CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(Expressed in Canadian Dollars)
(Unaudited)
AS AT
September 30, December 31,
2014 2013
ASSETS
Current
Cash $ 181,686 $ 1,429,699
Term deposit (Note 5) - 150,583
Restricted cash (Note 6) 25,000 100,000
Amounts receivable 47,977 110,911
Prepaids 106,443 190,244
361,106 1,981,437
Equipment (Note 7) 62,390 75,584
Mineral property acquisition costs (Note 9) 5,680,292 5,680,292
Exploration and evaluation assets (Note 9) 6,700,576 3,399,268
$ 12,804,364 $ 11,136,581
LIABILITIES
Current
Accounts payable and accrued liabilities $ 558,447 $ 667,209
Promissory note (Note 10) 62,231 -
Debenture (Note 11) 805,582 -
Flow-through share premium 75,297 127,000
Amounts due to related party (Note 15) 259,129 118,298
1,760,686 912,507
Deferred income tax liability 146,198 146,198
1,906,884 1,058,705
EQUITY
Share capital (Note 12) 18,173,796 17,432,543
Contributed surplus (Note 13) 5,087,879 4,482,971
Warrants (Note 14) 4,089,273 4,054,637
Cumulative translation adjustment (1,722) 56,894
Deficit (18,284,226) (17,015,956)
9,065,000 9,011,089
Non-controlling interest (Note 20) 1,832,480 1,066,787
10,897,480 10,077,876
$ 12,804,364 $ 11,136,581
Nature of operations and going concern (Note 1)
Commitments (Note 18 and 21)
Subsequent event (Note 22)
Approved and authorized by the Board on November 12, 2014:
“Ed Guimaraes” Director “Scott Kelly” Director
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
3
GIYANI GOLD CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Expressed in Canadian Dollars)
(Unaudited)
For the For the
three three For the nine For the nine
months months months months
ended ended ended ended
September September September September
30, 2014 30, 2013 30, 2014 30, 2013
EXPENSES
Corporate, general and administration $ 486,872 $ 615,170 $ 1,360,879 $ 2,523,018
Amortization (Note 7) 4,397 4,616 13,194 13,849
Financing fee (Note 21) - - 150,000 -
Stock-based compensation (Note 13) 6,855 - 741,533 77,738
Net loss before interest and other items 498,124 619,786 2,265,606 2,614,605
Foreign exchange loss (80) 141,724 (1,928) (28,822)
Interest and other income (10,873) (69,258) (54,260) (200,517)
Other income on settlement of flow-through
premium obligation (2,196) - (51,706) -
Write down of amounts receivable 65,000 - 65,000 -
Recovery of accounts payable (107,654) - (113,252) -
Net loss for the period 442,324 692,252 2,109,463 2,385,266
Other Comprehensive Income
Items that may be subsequently
reclassified to profit and loss
Currency translation adjustment 30,617 - 58,616 -
Comprehensive loss for the period $ 472,941 $ 692,252 $ 2,168,079 $ 2,385,266
Attributable to:
Owners of the parent $ 380,500 $ 692,252 $ 1,810,169 $ 2,385,266
Non-controlling interest 61,824 - 299,294 -
Net loss for the period $ 442,324 $ 692,252 $ 2,109,463 $ 2,385,266
Basic and diluted loss per common share $ 0.01 $ 0.01 $ 0.04 $ 0.04
Weighted average number of
common shares outstanding 57,193,993 54,978,578 55,756,800 54,571,440
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
4
GIYANI GOLD CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
(Expressed in Canadian Dollars)
(Unaudited)
Share Capital
Non- Cumulative
Contributed Controlling Translation
Number Amount surplus Warrants Interest Adjustment Deficit Total
Balance, December 31, 2012 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 153,750 249,214 - (118,526) - - - 130,688
Shares issued on
exercise of options 250,000 73,175 (35,675) - - - - 37,500
Shares issued 350,000 199,500 - - - - - 199,500
Options granted by subsidiary - - 77,738 - - - - 77,738
Net loss for the period - - - - - - (2,385,266) (2,385,266)
Balance, September 30, 2013 54,978,578 17,432,543 4,482,971 4,254,134 (13,048) - (15,962,400) 10,194,200
Change in non-controlling
interest due to amalgamation
and dilution impact - - - - 1,370,057 - 225,880 1,595,937
Tax on expired warrants - - - (199,497) - - - (199,497)
Currency translation adjustment - - - - - 56,894 - 56,894
Net loss for the period - - - - (290,222) - (1,279,436) (1,569,658)
Balance, December 31, 2013 54,978,578 17,432,543 4,482,971 4,054,637 1,066,787 56,894 (17,015,956) 10,077,876
Shares of subsidiary issued to
non-controlling interest - - - - 22,509 - 16,361 38,870
Change in non-controlling
interest due to acquisition of
Birch Hill Gold Corp. and
dilution impact - - - 34,636 905,853 - 525,538 1,466,027
Shares issued as financing fee 454,545 150,000 - - - - - 150,000
Private placement 2,000,000 600,000 - - - - - 600,000
Share issuance costs - (8,747) - - - - - (8,747)
Options granted by subsidiary - - 182,751 - 136,625 - - 319,376
Stock-based compensation - - 422,157 - - - - 422,157
Currency translation adjustment - - - - - (58,616) - (58,616)
Net loss for the period - - - - (299,294) - (1,810,169) (2,109,463)
Balance, September 30, 2014 57,433,123 $ 18,173,796 $ 5,087,879 $ 4,089,273 $ 1,832,480 $ (1,722) $ (18,284,226) $ 10,897,480
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
5
GIYANI GOLD CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Expressed in Canadian Dollars)
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30
2014 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (2,109,463) $ (2,385,266)
Non-cash items:
Accrued interest expense 13,755 -
Amortization 13,194 13,849
Financing fee 150,000 -
Stock-based compensation 741,533 77,738
Write-down of amounts receivable 65,000 -
Recovery on accounts payable (113,252) -
Other income on settlement of flow-through premium (51,706) -
Changes in non-cash working capital items:
Receivables 5,472 (144,577)
Prepaid expenses 83,801 (42,940)
Accounts payable and accrued liabilities (546,865) 76,041
Amounts due to related parties 140,831 66,787
(1,607,700) (2,338,368)
CASH FLOWS FROM INVESTING ACTIVITIES
Redemption of term deposit 150,583 986,129
Restricted cash 75,000 100,000
Exploration and evaluation asset expenditures (324,397) (655,505)
Acquisition of Birch Hill Gold Corp. (116,156) -
(214,970) 430,624
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on issuance of shares 605,120 168,188
Share issue costs (8,747) -
596,373 168,188
Effect of foreign exchange on cash (21,716) -
Change in cash during the period (1,248,013) (1,739,556)
Cash, beginning of period 1,429,699 1,852,133
Cash, end of period $ 181,686 $ 112,577
The significant non-cash transaction during the period ended September 30, 2014 included the Company issuing 125,000
common shares of Canoe Mining Ventures Corp. valued at $33,750 to Emerald for the Keating East Property (Note 9) and
issuing 454,545 common shares valued at $150,000 as a financing fee (Note 21).
There were no significant non-cash transactions during the period ended September 30, 2013.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
6
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
1. NATURE OF OPERATIONS AND GOING CONCERN
Giyani Gold Corp. ("Giyani", or "the Company") was incorporated under the Canada Business Corporations Act on July
26, 2007 and continued under the Business Corporations Act of British Columbia on August 4, 2010. The Company 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 Rock Island Gold Project in South Africa
and ongoing exploration for gold at its properties in Northern Ontario, Canada. The registered address is Suite 403 -
277 Lakeshore Road East, Oakville, Ontario, L6J 6J3. The Company trades on the TSX Venture Exchange (“TSXV”)
under the symbol “WDG”.
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.
During the nine months ended September 30, 2014, the Company, through its subsidiary Canoe Mining Ventures Corp.
(“Canoe”), acquired all of the issued and outstanding common shares of Birch Hill Gold Corp. which holds the
Coldstream and Kerrs properties (Note 4).
The Company reported a net loss of $2,109,463 for the period ended September 30, 2014 (2013 - $2,385,266) and had
an accumulated deficit of $18,284,226 at September 30, 2014 (December 31, 2013 - $17,015,956).
In addition to its working capital requirements, the Company must secure sufficient funding for existing commitments
and exploration costs.
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, 2014 in the statement of
position 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.
These financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the
reported expenses and statement of financial position classifications that would be necessary should the going concern
assumption be inappropriate, and those adjustments could be material. The Company will continue to pursue
opportunities to raise additional capital through equity markets and/or debt to fund investment in its exploration and
evaluation assets; however, there is no assurance of the success of sufficiency of these initiatives. Should the
Company fail to secure the necessary financing, judgements regarding the recoverability of the mineral property
acquisition costs and the exploration and evaluation assets could change resulting in a significant impairment to
existing assets.
2. BASIS OF PREPARATION
Statement of Compliance
These condensed consolidated interim financial statements, including comparatives, have been prepared in
accordance with International Accounting Standards (“IAS”) 34 ‘Interim Financial Reporting’ (“IAS 34”) using accounting
policies consistent with IFRS issued by the International Accounting Standards Board (“IASB”) and Interpretations of
the International Financial Reporting Interpretations Committee (“IFRIC”). The accounting policies and methods of
computation applied by the Company in these condensed consolidated interim financial statements are the same as
those applied in the Company’s annual financial statements for the year ended December 31, 2013.
7
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
2. BASIS OF PREPARATION (cont’d…)
Basis of Consolidation and Presentation
The condensed consolidated interim financial statements have been prepared on a historical cost basis except for
certain financial assets that are measured at fair value. All dollar amounts presented are in Canadian dollars unless
otherwise specified.
The condensed consolidated interim financial statements incorporate the financial statements of the Company and
entities controlled by the Company. 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:
Company
Ownership Place of Method of
Entity Name (%) Incorporation Functional Currency Consolidation
Canoe Mining Ventures Corp. 49.3 Canada Canadian Dollar Consolidated
Coldstream Mineral Ventures Corp. 100.0 Canada Canadian Dollar Consolidated
Sheltered Oak Resources Corp. 100.0 Canada Canadian Dollar Consolidated
Alpha 111 Holdings Co. Ltd. 100.0 Barbados Canadian Dollar Consolidated
Beta 222 Holdings Co. Ltd. 100.0 Barbados Canadian Dollar Consolidated
Giyani Gold Holdings 333 (Pty) Ltd. 100.0 South Africa Canadian Dollar Consolidated
Giyani Gold South Africa (Pty) Ltd. 100.0 South Africa South African Rand Consolidated
Lexshell 831 Investments (Pty) Ltd. 100.0 South Africa South African Rand Consolidated
GGC South Africa Mining 111 (Pty) Ltd. 100.0 South Africa South African Rand Consolidated
Obliwize (Pty) Ltd. 100.0 South Africa South African Rand Consolidated
Obliweb (Pty) Ltd. 100.0 South Africa South African Rand Consolidated
Lexshell 837 Investments (Pty) Ltd. 64.0 South Africa South African Rand Consolidated
Rock Island Trading 17 (Pty) Ltd. (1) 28.8 South Africa South African Rand Proportionate
(1)
28.8% represents the Company’s effective ownership in Rock Island Trading 17 (Pty) Ltd. is a joint operation.
Use of Estimates
The Company performed an analysis of risk factors which, if any should be realized, could materially and adversely
affect the results, financial position and/or market price of its securities.
The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the reported amount of expenses and other income
for the year. These estimates and assumptions were based on management’s knowledge of the relevant facts and
awareness of circumstances, having regard to prior experience. Significant estimates and assumptions include the
following (excluding going concern which is disclosed in Note 1):
(i) Recoverability of exploration and evaluation properties
Management will consider the economics of its exploration and evaluation assets, including the drill and
geophysical results. Consideration was also given to the risk factors mentioned in Note 17 (and in Note 1) and their
potential impact on the economics of the mineral property assets.
(ii) Other accounting estimates
Other estimates included the benefits of future income tax assets and whether or not to recognize the resulting
assets on the statement of financial position, the estimated useful lives of capital assets, and determinations as to
whether exploration costs should be expensed or capitalized.
While Management believes that these estimates and assumptions are reasonable, actual results may differ from
the amounts included in the consolidated financial statements.
8
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
2. BASIS OF PREPARATION (cont’d…)
Use of Estimates (cont’d…)
(iii) Stock-based compensation
Management is required to make certain estimates when determining the fair value of stock option awards, and the
number of awards that are expected to vest. These estimates affect the amount recognized as stock-based
compensation in the statements of loss based on estimates of forfeiture and expected lives of the underlying stock
options.
New standards not yet adopted
IFRS 9 – Financial instruments (“IFRS 9”) was updated by the IASB in November 2009 and will replace part of IAS 39 -
Financial Instruments: Recognition and Measurement (“IAS 39”). IFRS 9 addresses the classification and measurement
of financial assets. The two measurement categories for financial assets include amortized cost and fair value. All
equity instruments are measured at fair value. A debt instrument is recorded at amortized cost only if the entity is
holding it to collect contractual cash flows and the cash flows represent principal and interest. Otherwise it is recorded
at fair value through profit or loss.
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
rather than the income statement, unless this creates an accounting mismatch. IFRS 9 is effective for annual periods
beginning on or after January 1, 2018. The Company is in the process of assessing the impact of this pronouncement.
3. REVERSE TAKEOVER TRANSACTION
On December 5, 2013, the Canoe (formerly C-Level III Inc, a capital pool corporation under the policies of the TSXV)
acquired 2299895 Ontario Inc. ("2299895"), a subsidiary of Giyani, through amalgamation. In accordance with the
terms of the Letter Agreement, the Company entered into the Amalgamation Agreement with 2299895 and Giyani to
carry out a Qualifying Transaction (“QT”). Pursuant to the terms of the Amalgamation Agreement, Canoe acquired all of
the issued and outstanding shares of 2299895 and 2299895 amalgamated with a wholly-owned subsidiary of Canoe,
Ontario AcquisitionCo, to create Canoe Mining Ventures Inc. The 12,852,515 issued and outstanding 2299895 Shares
of which Giyani Gold owned 12,602,515, representing approximately 98.1% of the issued and outstanding 2299895
Shares were exchanged for 20,000,000 shares of Canoe. As a result of the transaction, Giyani's interest in Canoe
declined from 98.1% to 57.4%.
The 865,395 New 2299895 shares issued to subscribers pursuant to a 2299895 private placement were exchanged for
a total of 6,057,765 shares of Canoe, on the basis of seven shares of Canoe for each New 2299895 share and seven
warrants of the Canoe.
The QT constituted a reverse acquisition of Canoe inasmuch as the former holders of 2299895 shares (excluding the
subscribers participating in the 2299895 Private Placement) owned approximately 59.5% of the outstanding shares of
the Canoe immediately after closing, including the conversion of the New 2299895 shares.
Prior to completion of the QT, C Level had 5,004,343 shares outstanding (including 3,250,000 C Level Seed Shares
subject to an escrow agreement), 483,392 C Level options exercisable at a price of $0.20 per C Level Share, and
175,435 C Level Warrants exercisable at a price of $0.20 per C Level share. Upon completion of the transaction, C
Level owned approximately 14.9% of Canoe.
The reverse takeover resulted in the issuance of common shares, broker warrants, and stock options to holders of C
Level equity investments with a total deemed value paid for C Level as agreed between C Level and 2299895. The
excess value of the consideration deemed paid of $645,361 over C Level net assets deemed received has been
reflected as a listing expense in the statement of loss and comprehensive loss as C Level was a non-operating public
company with nominal assets.
9
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
3. REVERSE TAKEOVER TRANSACTION (cont’d…)
Shares Price Amount
Fair value of common shares deemed issued to former
C Level shareholders 5,004,343 $ 0.15 $ 750,651
Fair value of broker warrants deemed issued to former
C Level broker warrant holders 2,456
Fair value of stock options deemed issued to former
C Level stock option holders 42,539
Total fair value of consideration deemed paid 795,646
Less C Level net assets received (150,285)
Public company listing expense $ 645,361
Net Assets Received
Description Amount
Opening C Level share capital $ 520,451
Options and warrants previously issued 90,498
C Level deficit (460,664)
Deemed fair value of C Level $ 150,285
4. ACQUISITION OF BIRCH HILL GOLD CORP.
On June 3, 2014, the Company’s subsidiary, Canoe, completed an amalgamation (“Amalgamation”) with Birch Hill
Gold Corp. ("Birch Hill") pursuant to which Birch Hill and 0996623 BC Ltd., a wholly owned subsidiary of the Company,
amalgamated under the name “Coldstream Mineral Ventures Corp.” The Company acquired all of the issued and
outstanding common shares of Birch Hill by issuing 5,368,554 common shares of Canoe representing one common
share of the Canoe for every 2.5 Birch Hill common shares. Canoe has reserved 1,559,432 common shares for
issuance on the exercise of share purchase warrants issued in exchange for the outstanding Birch Hill share purchase
warrants on the same exchange terms.
The net assets of Birch Hill were valued with reference to the fair market value of the Canoe’s common shares as at
June 3, 2014 being $0.26 and included additional costs of $116,156. Additionally, the share purchase warrants were
assigned a value of $70,203 estimated based on the Black-Scholes pricing model using the following weighted
average assumptions: risk-free interest rate – 1.11%; expected life – 2 years; expected volatility – 100%; and expected
dividends - Nil. This transaction has been accounted for as an acquisition of net assets, rather than a business
combination, as the net assets acquired did not represent a separate business operation.
The net assets of Birch Hill acquired are as follows:
Description Amount
Receivables $ 7,657
Exploration and evaluation assets (Note 9) 2,983,041
Accounts payable and accrued liabilities (554,457)
Promissory note (Note 10) (63,464)
Debenture (Note 11) (790,594)
Net assets $ 1,582,183
10
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
5. TERM DEPOSIT
As at December 31, 2013, the Company had a term deposit with a carrying value of $150,583 which was redeemed
during the period ended September 30, 2014. The term deposit was held in the form of an interest bearing savings
account at a Canadian Chartered bank, earning interest of approximately 1.35% per annum.
6. RESTRICTED CASH
The Company has credit cards with a major financial institution with an aggregate credit limit of $25,000 (December 31,
2013 - $100,000). The financial institution holds a $25,000 (December 31, 2013 - $100,000) 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.
7. EQUIPMENT
Furniture
and Mining and Computer Phone
Fixtures Exploration Equipment Equipment Total
Cost
Balance,
December 31, 2012 and 2013,
and September 30, 2014 $ 31,186 $ 21,724 $ 23,365 $ 42,243 $ 118,518
Accumulated depreciation
Balance, December 31, 2012 $ 5,268 $ 7,000 $ 7,464 $ 4,737 $ 24,469
Additions for the year 3,703 5,896 5,300 3,566 18,465
Balance, December 31, 2013 8,971 12,896 12,764 8,303 42,934
Additions for the period 2,380 3,644 5,030 2,140 13,194
Balance, September 30, 2014 $ 11,351 $ 16,540 $ 17,794 $ 10,443 $ 56,128
Net book value
As at December 31, 2013 $ 22,215 $ 8,828 $ 10,601 $ 33,940 $ 75,584
As at September 30, 2014 $ 19,835 $ 5,184 $ 5,571 $ 31,800 $ 62,390
8. 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, 2014, Giyani has recorded a deposit of $13,351 (December 31, 2013 -
$15,018) included in exploration and evaluation assets.
9. EXPLORATION AND EVALUATION ASSETS
Mineral Property Acquisition Costs
Acquisition costs for Rock Island, South Africa
Balance, December 31, 2012, 2013 and September 30, 2014 $ 5,680,292
11
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
9. EXPLORATION AND EVALUATION ASSETS (cont’d…)
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 45% of the shares of
Rock Island Trading (Pty) Ltd.
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.
On October 26, 2012, Lexshell 831 sold a further 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 with proceeds from the property.
After sale of the shares Lexshell 831 is the legal and beneficial owner of 64% of the issued and outstanding shares of
Lexshell 837.
Total expenditures on exploration and evaluation assets are as follows:
South
South Africa Africa
Balance, December 31, 2012 $ 1,638,020
Current expenditures 110,803
Balance, December 31, 2013 1,748,823
Current expenditures 79,974
Currency Translation Adjustment (39,880)
Balance, September 30, 2014 $ 1,788,917
Canada – Iron Lake Gold Project Killins Emerald Abbie Lake Keating Total
Balance, December 31, 2012 $ 267,200 $ 354,523 $ 563,148 $ 298,946 $ 1,483,817
Current expenditures - 112,495 54,133 - 166,628
Balance, December 31, 2013 267,200 467,018 617,281 298,946 1,650,445
Acquisition costs - 68,750 - - 68,750
Current expenditures - - 197,007 - 197,007
Balance, September 30, 2014 $ 267,200 $ 535,768 $ 814,288 $ 298,946 $ 1,916,202
Canada – Coldstream Coldstream Kerrs Total
Balance, December 31, 2012 and 2013 $ - $ - $ -
Acquisition costs 2,875,625 110,027 2,985,652
Current expenditures 9,805 - 9,805
Balance, September 30, 2014 $ 2,885,430 $ 110,027 $ 2,995,457
Total exploration and evaluation assets
December 31, 2012 $ 3,121,837
December 31, 2013 $ 3,399,268
September 30, 2014 $ 6,700,576
12
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
9. EXPLORATION AND EVALUATION ASSETS (cont’d…)
South Africa
Rock Island Gold Project
Pursuant to the joint operation agreement relating to the assets of Rock Island, the Company funds the joint operation
with Corridor Mining Resources (“CMR”) on a 50:50 basis, whereby both parties are to share the costs evenly on an
ongoing basis. Exploration costs are recorded in a loan account 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%. As at December 31, 2013 the Company had
advanced $1,748,823 to Rock Island for exploration work.
Khavagari and Siyandani
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.
Northern Ontario, Canada
UCEL Option Agreement
The Company 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 paid the Optionor $50,000
upon receipt of the approval of the UCEL Agreement by the TSXV (the “Approval Date”) and issued 200,000 common
shares of 2299895 (exchanged for 311,223 shares of the Company (see note 3)) valued at $20,000.
In November 2012, the Company paid $50,000 and issued 150,000 common shares of 2299895 (exchanged for
233,417 shares of the Company (see note 3)) valued at $15,000 pursuant to the agreement. The UCEL Agreement
also specifies payments to the Optionor in the amount of $50,000 and 150,000 common shares of 2299895 within 24
months of the Approval Date. Pursuant to an amending agreement dated October 28, 2013, the Company renegotiated
the final share payment to be 75,000 shares to be due on or before April 30, 2014. The 75,000 shares were issued on
December 17, 2013 and ascribed a fair value of $12,000.
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. Pursuant to an amending
agreement dated October 28, 2013, the Company renegotiated the Initial Work Program to be $600,000 prior to June
30, 2014 and a total of $1,000,000 by June 30, 2015. As at September 30, 2014, $632,586 has been incurred relating
to the Initial Work Program (excluding acquisition costs) on the property and the June 30, 2014 work commitment has
been completed.
The Company must pay a 3% net smelter royalty (“NSR”) on ore and a 3% gross overriding royalty (“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. The Company
must pay 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.
13
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
9. EXPLORATION AND EVALUATION ASSETS (cont’d…)
Keating Property, Ontario
The Company executed a licensing agreement on November 1, 2011 (the “Michipicoten Agreement”) 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 five years and
contains the option to extend the Michipicoten Agreement for an additional five years.
Terms of the Michipicoten Agreement require the Company to pay $8,040 for the first year and $500 multiplied by the
number of grid claims that constitute the licensed area for the remaining four years. If the Company extended the
Michipicoten Agreement for an additional five years, the Company would be required to pay $600 multiplied by the
number of grid claims that constitute the licensed area during each of the additional five years of the agreement. The
Company is responsible for all taxes related to the licensed area during the term of the Michipicoten Agreement. The
current land package for the exploration area held by the Company is 70.02 grid claims.
The Company 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.
The Company shall pay the Licensor for each mine commencing commercial production, the conditional option of
reducing the royalty retained by and payable to the lessor therein to a maximum of 2% for all minerals except for
diamonds, gems and other precious or semi-precious stones which will remain at 5%. The purchase price for the first
1% of the royalty shall be $1,000,000 and for each remaining 1/2% increment of the royalty there-after the purchase
price shall be $1,000,000.
Keating East
On March 21, 2012, the Company executed an agreement (the “Keating East Agreement”) with 2099840 Ontario Inc.
trading as Emerald Geological Services (“Emerald”), an arm’s length party, to have Emerald release an additional 985
Ha area of claims (the “Lands”) in the form of certain surface and mineral rights situated in Keating Township, Ontario,
Canada, contiguous to the Company's Abbie Lake Property and then to have these Lands included in the licensing
agreement with Michipicoten.
The Keating East Agreement entitles Emerald to completely release its interest in the Lands from the Licensor and to
have the Company 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. 50,000 common shares of 2299895 (exchanged for 77,806
shares of the Company. (see note 3)) were issued on September 23, 2012 valued at $5,000. The total current value of
the maximum cash consideration payable if all conditions are satisfied is $226,600. 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 under license from a private arms-length corporate entity to 2299895 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 February 13, 2013, between 2299895 and Emerald, Emerald has agreed
that all future obligations pursuant to the Keating East Agreement shall be jointly those of 2299895 and the Company
and has agreed to exchange the 50,000 2299895 shares it currently holds for 125,000 shares of the Company. In
addition, pursuant to an amendment agreement, dated January 23, 2013, Emerald has agreed to extend the date for
payment of the consideration payable upon the first anniversary of the Completion of the QT to December 31, 2013 and
agreed that the Company is responsible for the payment of $25,000 and the issuance of 125,000 shares of the
Company. Pursuant to an amending agreement dated August 12, 2013, 2299895 and Emerald agreed to issue the
125,000 shares of the Company (issued on December 17, 2013 and ascribed a fair value of $20,000) and to pay
Emerald $25,000 on or before December 31, 2013 (paid, as stipulated). In addition, Emerald acknowledges that the
shares to be issued on the second and third anniversary will be 125,000 shares of Giyani Gold Corp.
During to the period ended September 30, 2014, the Company paid $35,000 as an option payment on the Keating East
Agreement and issued 125,000 common shares of Canoe valued at $33,750.
14
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
9. EXPLORATION AND EVALUATION ASSETS (cont’d…)
Killen Agreement
On July 12, 2012, the Company executed a licensing agreement with a private arm’s length party (“Killen Agreement”).
The Killen 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.
The license agreement for the Lands will be the same terms and conditions as the Michipicoten Agreement.
Hamlin-Deaty Creek Property, Ontario
On May 12, 2014, the Company entered into binding letters of intent (“Hamlin Agreement”) with Glencore Canada
Corporation (“Glencore”), Rainy Mountain Royalty Corp. (“Rainy Mountain”), and Mega Uranium Ltd. (“Mega Uranium”)
to purchase a 100% interest in the Hamlin Deaty Creek Property located in the Shebandowan Belt 110 km west of
Thunder Bay, Ontario.
Pursuant to the terms of the Hamlin Agreement, the Company will make a cash payment of $50,000 to Glencore (paid
subsequent to September 30, 2014) and grant Glencore a 1% NSR together with a right of first refusal for an off-take
agreement. Rainy Mountain and Mega Uranium were each issued 1,000,000 common shares of the Company
subsequent to the period ended September 30, 2014.
The underlying 2% NSR held by the original vending prospectors may be purchased by the Company under the
following terms: a 1% NSR may be purchased at any time for $1,000,000 and the Company maintains the first right of
refusal to purchase the remaining 1% NSR.
Coldstream Property, Ontario
With the acquisition of Birch Hill, the Company obtained a 100% interest in the Coldstream Property located 115 km
west of Thunder Bay, Ontario.
Certain claims are subject to a net smelter royalty (“NSR”) royalties ranging from 0.5% to 3%, with certain buy-down
provisions.
N Claims
The N Claims are comprised of three patented mineral claims (N1, N2, N3) which cover a total area of 133.4 hectares
and are internal to the Company’s Coldstream Property. To acquire the claim, Birch Hill issued 500,000 pre-
amalgamation shares in March 2014 valued at $62,500 and paid $50,000. The Company has acquired a 100% interest
in the claims.
The claims are subject to an NSR of up to 2%. Half of the NSR (1%) may be repurchased by the Company for
$1,000,000 prior to a production decision on the Coldstream Property and $2,000,000 thereafter.
Contingency
The Company has been notified of a legal claim related to actions of previous operators on the Coldstream property.
However, in the opinion of management this claim is without merit and no provision has been made for this claim in the
accounts.
Kerrs Gold Property, Ontario
In conjunction with the acquisition of Birch Hill, the Company acquired a 100% interest in the Kerrs Gold Property which
consists of 11 mining claims and 12 mining leasehold patents located in the Larder Lake Mining Division of Ontario.
The property is subject to NSR’s ranging from 0.8% to 2.0%.
15
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
10. PROMISSORY NOTE
In connection with the amalgamation of Birch Hill, the Company assumed a promissory note with the Wahgoshig First
Nation for a principal amount of $58,000 which accrues interest a rate of 5% per annum and matured on January 30,
2014. The total balance payable on the promissory note is $62,231 as of September 30, 2014 which includes $4,231 of
accrued interest expense.
11. DEBENTURE
Prior to the Amalgamation, Birch Hill issued a non-interest bearing debenture to Alto Ventures Ltd. (“Alto”) as partial
consideration for the acquisition of the remaining 40% interest in the Coldstream property. The debenture is secured
by a security interest in the Company’s 40% interest in the Coldstream property (including any buildings constructed on
the property) and proceeds from any insurance payout or sale of the property.
The debenture matured on November 21, 2013. Subsequent to the period ended September 30, 2014, the Company
and Alto agreed to a settlement (“Settlement”) to be enacted October 21, 2014 (“Settlement Date”) on the debenture as
follows:
a) $250,000 through the issuance of 1,250,000 common shares of the Company on the Settlement Date at a deemed
value of $250,000 (issued subsequent to September 30, 2014);
b) $50,000 on the Settlement Date (paid subsequent to September 30, 2014);
c) $50,000 on or before December 31, 2014;
d) $75,000 on or before March 31, 2015;
e) $75,000 on or before June 30, 2015; and
f) Granting a 1.5% NSR of portions of the Coldstream Property not previously subject to an NSR, subject to a right of
repurchase of 1.0% for $1,000,000, and a 0.5% NSR on portions of the Coldstream Property which are subject to
an existing NSR.
If the Company fails to meet the terms of the Settlement, Alto will maintain the right to enforce its claims under the
original terms of the debenture.
The Company has accrued interest of $14,988 during the period from acquisition of Birch Hill on June 3 to September
30, 2014.
Period ended
September 30,
2014
Principal acquired from Birch Hill $ 766,161
Accrued interest acquired from Birch Hill 24,433
Opening balance 790,594
Accrued interest expense 14,988
Closing balance $ 805,582
16
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
12. SHARE CAPITAL
a) Authorized share capital
Unlimited number of common shares without par value.
b) Issued share capital
Shares issued in the period ended September 30, 2014
The Company issued 454,545 common shares to Lambert Private Equity LLC as a commitment fee on an
investment agreement valued at $150,000 (Note 21).
On July 11, 2014, the Company completed a private placement of 2,000,000 units at a price of $0.30 per unit for
gross proceeds of $600,000. Each unit consists of one common share and one common share purchase warrant
which entitles the holder to acquire one common share of the Company at a price of $0.45 expiring July 11, 2016.
Shares issued in the year ended December 31, 2013
In fiscal 2013, Canoe issued 2,540,000 flow through shares. A liability of $127,000 related to tax benefits
associated with the flow through shares as been recorded.
In April 2013, the Company issued 350,000 common shares valued at $199,500 to an existing shareholder of
2299895, in return for 350,000 shares of 2299895.
13. STOCK OPTIONS
The Company has adopted an incentive stock option plan in accordance with the policies of the TSXV, under which the
Board of Directors of the Company may grant to directors, officers, employees and consultants of the Company,
non-transferable options to purchase common shares provided the number of shares reserved for issuance under the
stock option plan shall not exceed 10% of the issued and outstanding common shares, exercisable for a period of up to
five years from the date of grant. The Board of Directors determines the price per common share and the number of
common shares, which may be allotted to directors, officers, employees and consultants, and all other terms and
conditions of the option, subject to the rules of the TSXV.
Stock option transactions are summarized as follows:
Number of Stock Weighted Average
Options Outstanding Exercise Price
Balance, December 31, 2012 3,350,000 $ 1.43
Exercised (250,000) 0.15
Forfeited (400,000) 1.30
Balance, December 31, 2013 2,700,000 1.53
Granted 2,150,000 0.25
Forfeited (100,000) 1.30
Balance, September 30, 2014 4,750,000 $ 0.96
Balance, September 30, 2014 exercisable 4,725,000 $ 0.97
17
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
13. STOCK OPTIONS (cont’d…)
Stock options outstanding as at September 30, 2014:
Weighted Average
Life Remaining
Expiry Date Exercise Price (Years) Options Outstanding
November 3, 2015 $ 1.30 1.09 500,000
June 24, 2016 2.00 1.73 450,000
July 26, 2016 2.31 1.82 250,000
August 30, 2016 2.35 1.92 75,000
July 11, 2017 1.30 2.78 1,225,000
October 18, 2017 1.30 3.05 100,000
March 4, 2019 0.25 4.43 2,150,000
0.97 4,750,000
The Company’s subsidiary, Canoe, has 2,483,392 stock options outstanding of which 483,392 are exercisable at $0.20
until December 5, 2014 and 2,000,000 are exercisable at $0.25 until February 27, 2019.
Stock-based compensation
During the period ended September 30, 2014, the Company granted 2,150,000 (2013 – Nil) options to directors,
officers and consultants. The weighted average fair value of options granted and vesting during the period was $0.20
(2013 - $Nil)
Total stock-based compensation recognized in the statement of loss and comprehensive loss for the period ended
September 30, 2014 was $741,533 (2013 – $77,738). Of this amount, $422,157 (2013 - $Nil) relates to options granted
and vesting in the Company. The balance of $319,376 (2013 - $77,738) relates to the value of stock options granted by
the Company’s subsidiary, Canoe.
The following weighted average assumptions were used for the valuation of stock options granted by the Company:
2014 2013
Expected share price volatility 115.00% -%
Expected risk-free interest rate 1.66% -%
Expected dividend yield 0.00% -%
Expected life of options, in years 5.00% -%
14. WARRANTS
Warrant transactions are summarized as follows:
Number of Warrants Weighted Average
Outstanding Exercise Price
Balance, December 31, 2012 5,901,082 $ 0.95
Exercised (153,750) 0.85
Expired (1,075,456) 1.40
Balance, December 31, 2013 4,671,876 1.88
Granted 2,000,000 0.45
Balance, September 30, 2014 6,671,876 $ 1.45
18
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
14. WARRANTS (cont’d…)
Warrants outstanding as at September 30, 2014:
Weighted Average
Life Remaining Warrants
Expiry Date Exercise Price (Years) Outstanding
October 25, 2014 $ 1.88 0.07 4,671,876(1)
July 11, 2016 0.45 1.78 2,000,000
$ 1.45 6,671,876
(1)
Expired unexercised subsequent to the period ended September 30, 2014.
The Company’s subsidiary, Canoe, has 9,257,953 warrants outstanding with a weighted average exercise price of
$0.65 and a weighted average remaining life of 1.26 years.
15. RELATED PARTY TRANSACTIONS
Management Compensation
Remuneration of directors and key management personnel of the Company was as follows:
2014 2013
Payments to key management personnel:
Cash compensation $ 327,832 $ 559,005
Stock-based compensation 319,027 77,738
Management and consulting fees of $327,832 (2013 - $559,005) were paid to officers and directors or to companies
controlled by officers or directors.
During the period ended September 30, 2014, the Company paid or accrued $Nil (2013 - $154,730) to McCarthy
Tétrault LLP, a law firm where one of the Company’s former directors is a Partner. During the period ended September
30, 2014, the Company incurred legal fees of $151,211 (2013 - $Nil) with a legal firm where a partner is a Director of a
significant subsidiary of the Company. As at September 30, 2014, $84,226 (December 31, 2013 - $137,452) was
included in accounts payable and accrued liabilities with respect to these fees and certain expenses paid on the
company's behalf.
During the year ended December 31, 2012, the Company issued funds to 2299895 of $2,252,515, by means of an
unsecured loan, with no due date, bearing no interest. During the year ended December 31, 2013, the loan was
settled through the issuance of 2,252,515 common shares of 2299895, ascribed a fair value of $2,252,515. These
shares were exchanged for 3,505,174 of the Company on the closing of the QT.
During the year ended December 31, 2013, the Company reversed an intercompany loan payable from Canoe for
$56,905.
16. CAPITAL MANAGEMENT
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and
sustain future development of the business. The capital of the Company consists of equity.
The Company manages its capital structure and makes adjustments in light of the changes in its economic
environment and the risk characteristics of the Company’s assets. To effectively manage the Company’s capital
requirements, the Company has in place planning, budgeting and forecasting process to help determine the funds
required to ensure the Company has the appropriate liquidity to meet its operating and growth objectives. With the
exception of commitments detailed in Note 18, there were no externally imposed capital requirements to which the
Company is subject as at September 30, 2014.
19
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Company provides information about its financial instruments measured at fair value at one of three levels
according to the relative reliability of the inputs used to estimate the fair value. The hierarchy gives the highest priority
to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable
inputs. The three levels of the fair value hierarchy are as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quotes prices included in Level 1 that are observable for the asset or liability, either directly
(i.e., as prices) or indirectly (i.e., derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Fair Values
Cash and term deposits are classified as Level 2. The Company's cash is comprised primarily of current deposits held
with Canadian and South African chartered banks and term deposits consist of Canadian guaranteed investment
certificates. The fair values of cash and term deposits approximate their carrying values due to their short-term nature.
Financial risk factors
The Company's risk exposure and the impact on the financial instruments are summarized below:
Credit risk
Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its
contractual obligations. The Company's exposure to credit risk includes cash, term deposits, and cash equivalents.
The Company reduces its risk by maintaining its bank accounts at large Canadian, Barbados, and South African
financial institutions.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its obligations as they become due. The Company's
approach to managing liquidity risk is to provide reasonable assurance that it will have sufficient funds to meet its
liabilities when they come due. The Company manages its liquidity risk by forecasting cash flows required by
operations to and anticipated investing and financing activities. The Company's financial obligations currently consist
of accounts payable and accrued liabilities, and amounts due to related parties. The carrying value of the accounts
payable, accrued liabilities and due to related parties approximates fair value as they are short term in nature.
The Company had cash at September 30, 2014 of $181,686 (December 31, 2013 - $1,429,699). At September 30,
2014, the Company had accounts payable and accrued liabilities and due to related parties of $817,586 (December
31, 2013 - $785,507). Additionally, the Company is liable for a promissory note of $62,231 past due and the repayment
terms on the debenture as per Note 11.
Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk.
a) Interest Rate Risk
The Company's cash and cash equivalents consist of cash and term deposits held in bank accounts that earn
interest at variable interest rates. Future cash flows from interest income on cash will be affected by interest rate
fluctuations. Due to the short-term nature of these financial instruments fluctuations in market rates do not have a
significant impact on estimated fair values. The Company manages interest rate risk by maintaining an
investment policy that focuses primarily on preservation of capital and liquidity. The interest income earned on
cash is minimal; therefore, the Company is not subject to material interest rate risk.
20
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d…)
Market Risk (cont’d…)
b) Foreign Currency Risk
The Company is exposed to foreign currency risk of the South African rand. This risk is limited as contracts and
loan agreements are denominated in Canadian dollars where possible.
South African Rand
Cash $ 126,628
Accounts receivable 54,501
Accounts payable and accrued liabilities 1,156,415
Based on the net exposure at September 30, 2014, a 10% depreciation or appreciation of the South African rand
against the Canadian dollar would result in approximately a $8,817 increase or decrease in the Company’s net
loss for the period.
c) Other Price Risk
Other price risk is the risk that the fair or future cash flows of a financial instrument will fluctuate because of
changes in market prices, other than those arising from interest rate risk or foreign currency risk. The Company
is not exposed to any other price risk.
18. COMMITMENTS
The Company has committed to approximately $813,234 over the next five years for obligations under operating
leases, rent, exploration, and option payments.
2014 2015 2016 2017 2018
Exploration commitments $ - $ 407,500 $ 7,500 $ - $ -
Licenses and taxes 63,000 63,000 - - -
Option payments - 50,000 - - -
Rent (Oakville office) 23,811 95,243 95,243 7,937 -
$ 86,811 $ 615,743 $ 102,743 $ 7,937 $
Commitments, totaling $591,000, inclusive of exploration commitments, licenses and taxes and option payments are
those of Canoe.
The Company is committed to incur by December 31, 2014, $508,000 in qualifying resource expenditures pursuant to
its November 28, 2013 private placement for which flow-through proceeds were received. As at September 30, 2014,
the Company had spent $206,811 of the obligation. Accordingly, the flow through share premium liability was reduced
by $51,706 which was recognized as other income on settlement of flow-through share premium liability in the
statement of loss and comprehensive loss.
21
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
19. 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 (“Canoe”) and located in South Africa (“South Africa Mining”). The rest of the entities within
the Company are grouped into a secondary segment (“Corporate”).
The segmental report is as follows
South Africa
Nine months ended September 30, 2014 Canoe Mining Corporate Total
Property and equipment $ - $ - $ 62,390 $ 62,390
Exploration and evaluation 4,911,659 1,788,917 - 6,700,576
Total assets 4,982,118 7,487,163 335,083 12,804,364
Total liabilities 1,364,758 199,386 342,740 1,906,884
Net loss 672,480 (88,154) 1,525,137 2,109,463
Net additions to
exploration and evaluation assets 3,261,214 40,094 - 3,301,308
South Africa
Year ended December 31, 2013 Canoe Mining Corporate Total
Property and equipment $ - $ - $ 75,584 $ 75,584
Exploration and evaluation 1,650,445 1,748,823 - 3,399,268
Total assets 3,035,877 7,452,790 647,914 11,136,581
Total liabilities 531,683 389,936 137,086 1,058,705
Net loss 703,004 1,135,491 2,116,429 3,954,924
Net additions to
exploration and evaluation assets 166,629 110,803 - 277,432
20. NON-CONTROLLING INTEREST
On December 5, 2013, Canoe entered into the Amalgamation Agreement with 2299895 and Giyani to carry out a QT
(Note 3). As a result of the transaction, Giyani's interest in Canoe declined from 98.1% to 57.4%. Pursuant to
additional equity issuances by Canoe, the Company’s interest as at September 30, 2014 is 49.3%.
The Company has assessed its investment in Canoe and has judged that it has maintained control over Canoe as
defined by IFRS 10. Since equity issuances by Canoe did not result in a loss of control by Giyani, they have been
recorded as a transfer of equity to non-controlling interest holders. The major transactions not resulting in a loss of
control and the resulting impact are summarized and described as follows:
For the nine For the year
months ended ended
September 30, December 31,
2014 2013
Balance, beginning of period $ 1,066,787 $ (13,048)
Change in non-controlling interest 928,362 1,370,057
Stock-based compensation in Canoe 136,625 -
Share of loss attributing to non-controlling interests (299,294) (290,222)
Balance, end of period $ 1,832,480 $ 1,066,787
22
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
20. NON-CONTROLLING INTEREST (cont’d…)
Set out below is summary financial information for Canoe, in which the Company holds a 49.3% interest (December
31, 2013 – 57.4%). The amounts disclosed are based on those included in the consolidated financial statements,
before intercompany eliminations.
September 30, December 31,
Summarized consolidated statement of financial position 2014 2013
Current assets $ 70,460 $ 1,385,432
Current liabilities (1,218,560) (424,111)
(1,148,100) 961,321
Non-current assets 4,911,659 1,650,445
Non-current liabilities (146,198) (146,198)
4,765,461 1,504,247
Net assets 3,617,361 2,465,568
Accumulated non-controlling interest $ 1,832,480 $ 1,050,332
For the nine For the nine
months ended months ended
September 30, September 30,
Summarized consolidated statement of loss and comprehensive loss 2014 2013
Non-controlling interest percentage 50.7% -%
Expenses $ 729,784 $ 49,961
Net loss and comprehensive loss 672,480 36,721
Loss allocated to non-controlling interest $ 299,294 $ -
For the nine For the nine
months ended months ended
September 30, September 30,
Summarized consolidated statement of cash flows 2014 2013
Non-controlling interest percentage 50.7% -%
Cash flows from operating activities $ (908,392) $ 59,907
Cash flows from financing activities 5,120 -
Cash flows from investing activities (360,576) (52,812)
Of total cash and cash equivalents as of September 30, 2014, $12,551 (December 31, 2013 - $18,240) was held in
subsidiaries which have regulatory regulations, contractual restrictions or operate in countries where exchange
controls and other legal restrictions apply and are therefore not available for general use by the Company.
23
GIYANI GOLD CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the nine months ended September 30, 2014
21. FINANCING AGREEMENT
During the period ended September 30, 2014, the Company entered into an equity agreement (“Equity Agreement”)
with Lambert Private Equity LLC (“Lambert”), a California-based private equity firm.
In accordance with the Equity Agreement, Lambert will commit up to a maximum of $10,000,000 over a period of three
years. And, at the Company’s discretion at any time over the next 5 years, Lambert's commitment amount may be
increased from $10,000,000 to $25,000,000 with all other terms and conditions of the Equity Agreement remaining
unchanged and with no additional fees or compensation due.
Subject to certain conditions, upon notice by the Company ("Notice"), Lambert and associates of Lambert will
subscribe for, and the Company will agree to issue and sell, units ("Units") through a series of private placements
(each, a "Private Placement"). The purchase price per Unit for any given Private Placement will be equal to the greater
of (i) 90% of the lowest daily volume-weighted average price of the common shares of the Company (each, a "Share")
on the TSXV during the 15 trading days following Notice, or (ii) the lowest price permitted by the policies of the TSXV.
Each Unit will be comprised of one Share and one Share purchase warrant (each, a "Warrant"). Each Warrant will
entitle the holder thereof to acquire one additional Share for a period of five years from the date of issuance of such
Warrant at the lowest price permitted by the policies of the TSXV.
The number of Units to be subscribed for in each Private Placement will be determined by the Company in its sole
discretion and will be set forth in the applicable Notice. To the extent that Lambert arranges eligible substituted
purchasers for each Private Placement, its own obligation to subscribe for Units shall be reduced accordingly, subject
to certain conditions.
The proceeds from each Private Placement will be used for general corporate and working capital purposes and may
be used to evaluate and pursue strategic acquisitions. The Shares and Warrants underlying the Units issued pursuant
to each Private Placement will be subject to a four-month hold period.
Pursuant to the Equity Agreement, the Company paid Lambert a commitment fee valued at 150,000 by issuing
454,545 common shares which has been recorded in the condensed consolidated interim statement of loss and
comprehensive loss as a financing fee.
Prior to filing a Notice, Lambert may engage in purchases and sales of shares held for its own account as well as
shares borrowed by Lambert from third parties, including insiders. The obligation to deliver any borrowed securities
may be satisfied by delivery of shares subscribed for by Lambert pursuant to the Private Placement. With respect to
Shares subscribed for under the Agreement, one or more existing shareholders of the Company, including insiders,
may from time to time agree to exchange Shares owned by them that are not subject to resale restrictions with Shares
acquired under a Private Placement that are subject to the customary resale restrictions. The existing shareholders
who agree to loan shares, or agree to exchange shares which are not subject to resale restrictions, may be entitled to
receive a portion of the warrants issued on the Private Placement pursuant to arrangements made by Lambert. The
participation of each insider will be subject to the approval of the independent directors of the Company.
Each Private Placement will remain subject to receipt of regulatory approval from the TSXV. While the Company
cannot provide any assurances that it will be successful in completing the Equity Agreement, it is the Company’s
intention to obtain the funding.
22. SUBSEQUENT EVENT
Subsequent to the period ended September 30, 2014, Canoe closed the first tranche of a non-brokered private
placement by issuing 886,667 units at a price of $0.15 per unit for gross proceeds of $133,000. Each unit consists of
one common share of Canoe and one-half share purchase warrant. Each whole warrant entitles the holder to acquire
an additional common share of Canoe at a price of $0.25 expiring October 22, 2016.
02 January 2014
Sponsor: Sasfin Capital (a division of Sasfin Bank Limited)
24
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