Wrap Text
Management discussion and analysis on 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”)
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE PERIOD ENDED SEPTEMBER 30, 2014
DATED NOVEMBER 12, 2014
1
Management’s Discussion and Analysis September 30, 2014
The following discussion and analysis of the financial position and results of operations for Giyani Gold Corp. (the
“Company” or “Giyani Gold”) should be read in conjunction with the unaudited condensed consolidated interim
financial statements for the nine months ended September 30, 2014 and the audited consolidated financial statements
for the year ended December 31, 2013. Those statements were prepared under International Financial Reporting
Standards (“IFRS”). Except as otherwise disclosed, all dollar figures included therein and in the following management
discussion and analysis (“MD&A”) are quoted in Canadian dollars.
Certain information and discussion included in this MD&A constitutes forward looking information. Readers are
encouraged to refer to the cautionary notes contained in the section Forward-Looking Statements at the end of the
MD&A.
The Company’s financial statements and the financial data included in the MD&A have been prepared in accordance
with IFRS as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International
Financial Reporting Interpretations Committee.
Additional information and corporate documents may be found on SEDAR www.sedar.com, and the Giyani Gold
website www.giyanigold.com.
Company Overview and Going Concern
Giyani Gold 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”. The Company also trades on
the AltX board of the Johannesburg Stock Exchange under the symbol “JSE” and on the Alternative Investment Board
of the Namibian Stock Exchange under the symbol “GGC”.
Canoe Mining Ventures Corp. (“Canoe”) is currently owned 44.6% by the Company, and its financial results are
consolidated with the Company. In the year ended December 31, 2013, Canoe completed a Qualifying Transaction
(“QT”) which diluted the Company’s interest in Canoe. Details with respect to the QT are included in the accompanying
unaudited condensed consolidated interim financial statements for the period ended September 30, 2014.
During the nine months ended September 30, 2014, the Company, through its subsidiary Canoe, acquired all of the
issued and outstanding common shares of Birch Hill Gold Corp. which holds the Coldstream and Kerrs properties. The
transaction is discussed in Significant Events below.
The accompanying condensed consolidated interim financial statements have been prepared using 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 $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.
2
Management’s Discussion and Analysis September 30, 2014
The 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.
Significant Events
Mr. Bertan Atalay Appointed Interim President
The Company has appointed Mr. Bertan Atalay as Interim President effective November 4, 2014.
Giyani Gold had engaged Bertan Atalay, an energy professional with over 25 years of experience in mid-stream oil &
gas asset development and financing, as an independent consultant to consult on the pending acquisition of Horizon
Enerji A.S.(“Horizon”) and Sumo Coal (Pty) Ltd. (“Sumo”) as described below. Mr. Atalay is a seasoned energy
professional who has held leadership positions in public and private energy and resource corporations in Canada, the
United States, and Europe. In addition, Mr. Atalay helped in the structuring and placement of more than $4.5B in
limited and non-recourse project finance and has helped raise more than $150M in start-up, seed, and working capital
equity. Mr. Atalay has held positions with Shell, Continental Gas Storage, and Northland Power.
In connection with the appointment of Mr. Atalay, Mr. Chuck Allen has resigned as President of Giyani. Giyani's board
of directors would like to thank Mr. Allen and they wish him every success in his future endeavors.
Binding Letter of Intent with Horizon Enerji A.S. and Sumo Coal (Pty) Ltd.
The Company announced that it has entered into a binding letter of intent agreement (the "LOI"), as amended, with the
shareholders of Horizon and Sumo which outlines the general terms and conditions of a proposed transaction pursuant
to which Giyani would acquire all the issued and outstanding securities of Horizon and Sumo by means of a business
combination or other form of transaction (the "Transaction").
Upon completion of the Transaction Giyani will hold a 100% interest in Horizon's Ceyhan Project, a fully permitted
crude oil storage and dry bulk cargo port development project in Turkey, and a 100% interest in Sumo, a cash-flow
generating coal operator in South Africa. As consideration, it is expected that common shares in the capital of Giyani
will be issued to the shareholders of Horizon and Sumo.
The Transaction and the terms outlined in the Agreement are subject to a number of conditions, including the parties
executing a definitive agreement by December 31, 2014 (amended from October 31, 2014), completion of due
diligence investigations to the satisfaction of each of the parties, Giyani obtaining the required financing, acceptance of
the Transaction by the TSXV, no material adverse change and receipt of all necessary regulatory and shareholder
approvals.
There can be no assurance that the Transaction will be completed as proposed or at all. In connection with the
Transaction, it is contemplated that a debt and/or equity financing of up to US$25M will be undertaken by Giyani, with
a minimum of US$15M of this financing closing concurrently with the Transaction with the balance of such funds to be
raised in due course following the completion of the Transaction. In addition, it is contemplated that the common
shares of Giyani will be consolidated on a basis to be determined by the parties.
The Transaction is expected to be structured as a Reverse Takeover ("RTO") pursuant to Policy 5.2 - Change of
Business and Reverse Takeovers of the TSXV.
The legal structure for the Transaction will be determined after the parties have considered all applicable tax, securities
law, and accounting efficiencies.
Non-brokered Private Placement
On July 11, 2014, the Company completed a non-brokered private placement of 2,000,000 units at a price of $0.30 per
unit for gross proceeds of $600,000. Each unit is comprised of one common share and one common share purchase
warrant. Each share purchase warrant entitles the holder to purchase an additional common share at a price of $0.45
at any time prior to July 11, 2016.
3
Management’s Discussion and Analysis September 30, 2014
Financing Agreement with Lambert Private Equity LLC
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.
Amalgamation with Birch Hill Gold Corp.
On June 3, 2014, the Company completed an amalgamation (“Amalgamation”) with Birch Hill pursuant to which Birch
Hill and 0996623 BC Ltd., a wholly owned subsidiary of Birch Hill, 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 representing one common share of the Company for every 2.5 Birch Hill common shares.
The Company 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.
Birch Hill has focused on its wholly-owned Coldstream Property located 115km west of Thunder Bay, Ontario. Readers
may refer to the Exploration and Evaluation Update below for details regarding the Coldstream Property and news
releases filed on Sedar at www.sedar.com for additional information on the Amalgamation.
4
Management’s Discussion and Analysis September 30, 2014
Hamlin-Deaty Creek Property
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 (“Hamlin 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% net smelter royalty (“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.
Additional information regarding the Hamlin-Deaty Creek Property is available in the Company’s news release dated
May 12, 2014 on www.sedar.com.
R.S. Middleton, P.Eng, Canoe Mining's Exploration Manager, led the team that made the original discovery of the
Hamlin deposit and has since sponsored students to complete their thesis work on details of the geology and
mineralogy of the Hamlin Property.
Investor Relations
The Company has engaged Proconsul Capital Ltd. ("Proconsul") to provide investor relations services to Giyani Gold
and has entered into a consulting agreement.
Proconsul, a Toronto based company founded by Andreas Curkovic, plans to develop an investor relations campaign
for Giyani Gold focused on elevating the profile and recognition of Giyani Gold in the Canadian investment community.
To accomplish this, Proconsul will be building an investor audience by means of conducting roadshows, and
coordinating communication between Giyani Gold management and investment professionals.
Giyani Gold will pay Proconsul a monthly retainer of $5,000 and reimburse any preapproved expenses. The consulting
contract renews automatically on a month to month basis and may be terminated by either party at any point upon
thirty days written notice. Upon the six month anniversary of the consulting agreement, Giyani Gold may grant a
mutually agreed upon number of stock options to purchase common shares in the capital of Giyani Gold in accordance
with the rules and regulations set in the Giyani Gold stock option plan.
Exploration and Evaluation Update
The Company’s exploration strategy is to acquire mineral resources properties and then conduct a strategic, focused
and aggressive geological, geochemical, and geophysical exploration program over that land package.
Rock Island Project – South Africa
The Company’s active project in South Africa is a joint operation with the Rock Island Project.
In supporting the Company’s strategy to develop gold exploration projects in prolific Archean greenstone belts, the
Rock Island Project comprises two prospecting rights across four properties which contain six previously producing
gold mines. The Klein Letaba-Frankie, Horseshoe, Birthday and Louis Moore properties represent an area of 3,960 Ha
located a short distance southwest and northwest of the town of Giyani in the province of Limpopo, South Africa. The
prospecting licenses expire in July of 2015. These properties enjoy a well-developed infrastructure including ready
access to necessary water, power, transportation capabilities and human resources.
Rock Island’s strategy, supported by Giyani Gold, is to develop the Giyani Gold gold exploration projects in the Giyani
region by conducting effective historical data investigation and thereafter fast-tracking exploration and development on
the most deserving projects.
5
Management’s Discussion and Analysis September 30, 2014
Results from the extensive ground geophysical programs, which included Magnetometer, Max/Min, VLF
Electromagnetic & Induced Polarization surveys, identified certain anomalies which led to promising drill targets.
Subsequent drilling results have confirmed that gold mineralization remains nearby the historically past-producing gold
mines. Furthermore, the drilling has led to discoveries of new gold-bearing structures on the properties that were never
before identified.
The Company plans to conduct further exploration on the Rock Island Project by way of drilling and geophysics
(ground and airborne) with a view to developing a resource.
Based on positive results seen from the 2012 and 2013 diamond drilling program, the Company intends to continue
investing in the Rock Island project.
Pursuant to the joint venture agreement relating to the assets of Rock Island, the Company funds the joint venture with
its state-owned partner 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. The loan is unsecured, with no fixed repayment terms and bears interest at South
African prime +1%.
Khavagari and Siyandani – South Africa
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.
Rock Island Property Expenditures
The following table sets out the material components of costs and expenditures relating to the Rock Island Project.
The amounts shown for acquisition costs represent costs incurred to date and do not necessarily reflect present or
future values.
Total
Balance, December 31, 2012 $ 1,638,020
Expenditures for the year 110,803
Balance, December 31, 2013 1,748,823
Expenditures for the period 79,974
Currency translation adjustment (39,880)
Balance, September 30, 2014 $ 1,788,917
Iron Lake Gold Project – Ontario, Canada (Canoe Mining Ventures Corp.)
The Iron Lake Gold Project is Canoe’s primary mining property in Canada and was assembled through option
agreements, licensing agreements and by staking claims. The Iron Lake Gold Project is an assembly of approximately
140 square kilometres of options and licenses within the western part of the Mishibishu Greenstone Belt near Wawa,
Ontario.
The Iron Lake Gold Project was acquired by Canoe through the QT executed in December 2013. Previous to the QT,
Giyani Gold initiated a focused and aggressive geological, geochemistry, and geophysical exploration program over
the Iron Lake land package.
6
Management’s Discussion and Analysis September 30, 2014
The exploration work at Iron Lake is being funded with flow-through capital on hand with a view to developing a
geological model for the property. To date, extensive airborne and ground geophysical programs have been conducted
with 17 holes totalling approximately 1,950 metres of “NQ” core drilled primarily in the Keating portion of the Iron Lake
Gold Project.
During the period ended September 30, 2014, the Company completed a 1,301m drill program was conducted on the
Abbie Lake section of the Iron Lake Gold Project and targeted a 3km section of the Iron Lake Deformation Zone, a
controlling structure for gold mineralization in the region.
The 10 drill holes completed by the Company intersected numerous sulphide zones as well as numerous gray and
black quartz veins within a rock sequence similar to those found at the Mishi Mine, a Wesdome Gold Mines Ltd.
property located 8km southwest of Abbie Lake. The Company’s target selection for this drill program was based on
induced polarization anomalies discovered in geophysical surveys conducted by Canoe Mining's subsidiary, 2299895
Ontario Inc., in 2012 near historic gold showings and intersections discovered by Tundra Gold Mines Ltd. between
1983 and 1988.
In addition to drilling, surface samples were collected from historic trenches, and a detailed mapping of Abbie Lake
was completed. Over 400 samples were collected and sent to AGAT Laboratories in Thunder Bay for preparation and
then to AGAT Laboratories in Mississauga for fire assay and inductively coupled plasma analysis.
The terms of the option and license agreements for the properties included in the Iron Lake Gold Project package are
detailed in the accompanying condensed consolidated interim financial statements for the nine months ended
September 30, 2014. The Technical Report on the Iron Lake Gold Project is dated November 19, 2013 and is filed on
Canoe’s website at www.canoemining.com.
Iron Lake Property Expenditures
The following table sets out the material components of costs and expenditures relating to each property in the Iron
Lake Gold Project. The amounts shown for acquisition costs represent costs incurred to date and do not necessarily
reflect present or future values.
Abbie Lake Keating,
Property Emerald, Killins Total
Properties
Balance, December 31, 2012 $ 563,148 $ 920,669 $ 1,483,817
Acquisition costs 62,000 107,480 169,480
Exploration expenditures 22,823 31,230 54,053
Costs recovered from parent (1) (30,690) (26,215) (56,905)
Balance, December 31, 2013 617,281 1,033,164 1,650,445
Acquisition costs - 68,750 68,750
Exploration expenditures 197,007 - 197,007
Balance, September 30, 2014 $ 814,288 $ 1,101,914 $ 1,916,202
(1)
In conjunction with the QT, the Company wrote off its inter-company balance of $56,905 with Canoe that was used
primarily to fund exploration and acquisition costs related to the properties.
Coldstream Property, Ontario
The 6,410-hectare Coldstream Gold Property is located along the Trans-Canada Highway 115 km west of the City of
Thunder Bay in north-western Ontario. The property was acquired with the acquisition of Birch Hill. The Coldstream
project is situated within the Archean age Shebandowan Greenstone Belt (SGB) of the Wawa Subprovince, host to
some of the largest precious (3 gold mines in Hemlo camp) and base metal (former Geco Cu-Zn-Ag and Winston Lake
Zn-Cu-Ag mines; Shebandowan Ni-Cu-PGM Mine) deposits.
7
Management’s Discussion and Analysis September 30, 2014
Since acquisition of the Coldstream Gold Project in 2009, Birch Hill has embarked upon 5 drill programs, totaling
21,494 metres of drilling and surface exploration programs consisting of mapping/prospecting, trenching, sampling and
geophysical IP and magnetic surveys. The Company recently completed a NI 43-101 resource estimate (763,276
ounces of gold ‘Inferred’ and 96,400 ounces of gold ‘Indicated’) and a scoping metallurgical test work (96.1% gold
recovery) on the OG Deposit (formerly known as the East Coldstream Deposit). The NI 43-101 compliant resource
estimation was carried out by Wardrop, a Tetra Tech company (Tetra Tech), and the metallurgical study was
completed by SGS Canada. The aggressive exploration work conducted during the short history of the Company has
provided investors with a consistent stream of drill and surface results.
Summaries of the Resource Estimate
Class Zone Tonnes Gold Gold*
(t) (g/t) (ounce)
Indicated EC-1 1,371,900 0.89 39,376
EC-2 2,144,800 0.83 57,024
Total 3,516,700 0.85 96,400
Inferred EC-1 20,732,000 0.77 515,454
EC-2 9,801,000 0.79 247,822
Total 30,533,000 0.78 763,276
*0.4 g/t cut-off
Within the past year, the Company released a compilation report of previously unreported historical data covering the
Burchell West block, which identified four priority target areas. The Burchell anomaly is largely underexplored and
located in close proximity to pre-existing infrastructure and a past producing mine. The compilation has identified a
number of previously over-looked targets that merit additional exploration:
Compilation Highlights:
- 17.85 g/T Au rock sample within a 600 metre north-south anomalous gold trend (Thunder Anomaly)
- 0.5 metres of 9.6 g/T Au, 192.2 g/T Ag and 7.266%Cu (Goldfields Gold Showing)
- 0.5 metres of 4.26 g/T Au, 128.8 g/T Ag and 3.821%Cu (Goldfields Gold Showing)
The results of the recently completed compilation program identified four priority target areas based on the presence of
(i) favorable geology, alteration and structure, (i) gold +/- silver +/- copper mineralization and (iii) geophysical
anomalies. The four priority target areas are referred to as the Golden Bay, Sanders Gold Porphyry and Goldfields
showings as well as the Thunder Anomaly. The Golden Bay, Sanders Gold Porphyry and the Thunder Anomaly are all
coincident with a 1.9km long Induced Polarization (IP) anomaly located along the east-northeast striking contact
between mafic and felsic volcanic stratigraphy and granite intrusive rocks.
Golden Bay Showing
- Located at the eastern end of a 1.9km IP chargeability anomaly and is associated with an IP resistivity low
flanking the edge of a 500m east-west trending magnetic high.
- Is underlain by strongly altered and sheared felsic volcanics and a mafic intrusive rock hosting trace to 5%
pyrite and <1% magnetite.
- Historical grab samples from felsic volcanic outcrop exposures hosting narrow east-west trending shear
structures (<1m wide) returned elevated and anomalous gold results from six grab samples varying from
1.62g/T Au to a maximum value of 9.4g/T Au. A 0.7m chip sample returned 1.106g/T Au and 0.2% Cu.
- Three historical diamond drill holes evaluated the northern edge of the IP resistivity low / magnetic high
geophysical signature returning significant results in drill hole BW-89-03 reporting 0.192g/T Au over 94.7m
core length, starting at a hole depth of 41.0m.
Sanders Gold Porphyry Showing
- Located at the western end of the 1.9km east-northeast trending IP chargeability anomaly noted above and
locally associated with an IP resistivity low and a moderate intensity magnetic high signature.
- The Sanders Gold Porphyry showing is underlain by sheared quartz feldspar porphyry hosting 2-5% Pyrite.
- A total of four grab samples from an outcrop returned anomalous gold values >0.1g/T Au to a maximum value
of 9.0g/T Au.
- Two historical drill holes (BW-88-08 and BW-88-09) evaluated the northern edge of the chargeability anomaly
undercutting the Sanders Gold Porphyry showing with best results reporting a maximum value of 0.40g/T Au
over 8.8m core length in drill hole BW-88-09 from a hole depth starting at 100.0m.
8
Management’s Discussion and Analysis September 30, 2014
Goldfields Showing
- Located 300m to the west of the 2011 Foundation Resources geophysical grid. No recent geophysical
surveys have been completed at the Goldfields showing.
- The Goldfields showing has been trenched over a distance of ~100m, exposing sheared, fractured and
sericite-altered felsic volcanics with narrow massive sulphide stringers and pods of pyrite, chalcopyrite and
sphalerite mineralization.
- Trench chip samples across the massive sulphide stringers and pods in trench TR-3 returned results up to a
maximum value of 9.6g/T Au, 192.2g/T Ag and 7.26% Cu over 0.5m and 4.26g/T Au, 128.8g/T Ag and 3.82%
Cu over 0.5m.
- One historic drill hole (BW-88-14) located approximately 100m to the west of the surface trenching returned a
maximum value of 1.3g/T Au over a 1.0m core length starting from a hole depth of 28.0m.
Thunder Anomaly
- The Thunder Anomaly is defined by a series of anomalous rock chip grab samples, which collectively outline
a north-south trend over 600m in length. The southern edge of the Thunder anomaly is located at the western
end of the 1.9km east-northeast trending IP chargeability anomaly. The northern edge of the anomaly is
defined by a 200m long, east-west trending IP chargeability anomaly and associated magnetic responses.
- The Thunder anomaly is underlain by sheared sericitically-altered and silicified mafic volcanic rocks.
- Prospecting, mapping and outcrop grab samples by Foundation Resources geologists in 2009 and 2011
outlined a 600m long north-south trend of anomalous gold results located to the west of the Sanders Gold
porphyry showing. Approximately 51 grab samples were submitted for analysis with five samples reporting
>1.5g/T gold. The maximum value received from the grab sample program returned 17.85g/T Au.
- To date, no drilling has been completed at the Thunder Anomaly.
The Burchell West area shows a number of similarities to the OG Deposit located 6km to the east. Gold occurrences
are localized along sheared mafic to felsic volcanics and quartz feldspar porphyries that have undergone a
combination of sericitization, silicification and iron oxide and/or carbonate alteration. The majority of the gold
occurrences have a low sulphide content of generally <5% with pyrite being the principal sulphide present. The
orientation of the 1.9km long Burchell West IP chargeability anomaly is similar to that of the east-northeast oriented
shear zones that host the majority of the gold deposits in the region.
Property Expenditures
The following table sets out the material components of costs and expenditures relating to each property acquired with
Birch Hill. The amounts shown for acquisition costs represent costs incurred to date and do not necessarily reflect
present or future values. Detailed expenditures are included in the notes to accompany condensed consolidated
interim financial statements for the nine months ended September 30, 2014.
Coldstream Kerrs
Property Property Total
Balance, December 31, 2012 and 2013 $ - $ - $ -
Acquisition costs 2,875,625 110,027 2,985,652
Exploration expenditures 9,805 - 9,805
Balance, September 30, 2014 $ 2,885,430 $ 110,027 $ 2,995,457
R.S. Middleton, P.Eng., a Qualified Person under the meaning of Canadian National Instrument 43-101, is a consultant
to the Company and responsible for the technical content of this Management’s Discussion and Analysis.
Outlook
Canoe Mining Ventures Corp.
The Company intends to expand on its exploration programs in fiscal 2014 on its Ontario properties. In November
2013, the Company raised $508,000 of flow through proceeds, of which $198,040 has been spent as of September 30,
2014, which will be spent on exploration in fiscal 2014. Additional funds will need to be raised to further advance the
exploration program. The Company is currently reviewing its geological information and supplementary data to plan
and initiate the exploration program.
9
Management’s Discussion and Analysis September 30, 2014
Giyani Gold Corp.
The Company’s primary objectives .include the following:
- Enter into a definitive agreement with respect to the LOI with Horizon and Sumo.
- Evaluate prospective exploration and production acquisition properties in South Africa to support the
Company’s strategic focus on Southern Africa.
Results of Operations
Selected Quarterly Financial Information
The following table summarizes information derived from the Company’s consolidated financial statements for each of the
eight mostly recently completed quarters:
Loss per Share
Three months ended Total Revenues Net Loss (basic and diluted)
September 30, 2014 $ - $ 442,324 $ 0.01
June 30, 2014 - 588,226 0.01
March 31, 2014 - 1,078,914 0.02
December 31, 2013 - 1,569,658 0.03
September 30, 2013 - 692,253 0.01
June 30, 2013 - 956,369 0.02
March 31, 2013 - 736,644 0.01
December 31, 2012 - 2,289,727 0.05
Significant fluctuations to the net loss of the Company over the periods presented include:
- Stock-based compensation expense of $1,349,775 for options of the Company granted and vesting in the three
months ended September 30, 2012.
- A write-down of exploration and evaluation assets of $1,046,058 in the three months ended December 31, 2012
on an option agreement the Company elected to allow to lapse.
- A one-time, non-cash listing expense of $645,361 in the three months ended December 31, 2013 related to the
execution of the QT of Canoe (Note 3 of the accompanying unaudited condensed consolidated interim financial
statements for the period ended June 30, 2014).
- Stock-based compensation expense of $687,249 for options granted and vesting in the three months ended
March 31, 2014 for options of the Company and Canoe.
Results of Operations for the nine month period ended September 30, 2014 compared to 2013
The Company had a net loss of $2,109,463 for the period ending September 30, 2014, compared to a loss of
$2,385,266 for the same period in the previous year.
Corporate, general and administration expenses decreased from $2,523,018 for the nine months ended September
30, 2013 to $1,360,879 for the current period. In general, this is due to lower exploration activity in the current quarter.
Additionally, expenses in the nine months ended September 30, 2013 included significant investment in achieving a
listing on the Johannesburg Stock Exchange. Management fees included in the corporate overhead decreased from
$1,044,127 in 2013 to $763,161 in the current period as the Company invested in specific expertise in acquisitions and
exploration around the South Africa asset package and Johannesburg and Namibia listings in the prior year. Transfer
agent and listing fees have correspondingly decreased to $48,473 in the current period from $594,870 in the prior
period.
Stock-based compensation expense of $741,533 (2013 - $77,738) is a valuation of the stock options granted to
directors, officer and consultants which vested in the period by each of the Company and Canoe.
In the current period, the Company incurred a one-time financing fee of $150,000, paid in shares, to secure the
agreement with Lambert to provide equity financing over a multi-year term as detailed in Significant Events above.
10
Management’s Discussion and Analysis September 30, 2014
Results of Operations for the three month period ended September 30, 2014 compared to 2013
The Company had a net loss of $442,324 for the three month period ending September 30, 2014, compared to a loss
of $692,252 for the same period in the previous year.
Corporate, general and administration expenses decreased from $615,170 for the three months ended September 30,
2013 to $486,872 for the current period. Management and consulting fees included in corporate, general and
administration expenses decreased by $58,094 to $265,461 (2013 - $323,555) as the Company reduced
compensation payments to directors and officers.
Liquidity and Capital Resources
The Company is subject to the risks and challenges experienced by other companies at a comparable stage. These
risks include, but are not limited to, continuing losses, dependence on key individuals and the ability to secure
adequate financing or to complete corporate transactions to meet the minimum capital required to successfully
complete its projects and fund other operating expenses. Advancing the Company’s projects through exploration and
development to the production stage will require significant financings. Given the current economic climate, the ability
to raise funds may prove difficult.
None of the Company’s projects have commenced commercial production and, accordingly, the Company is
dependent upon debt and/or equity financings and the optioning and/or sale of resource or resource-related assets for
its funding. The recoverability of the carrying value of exploration and evaluation projects, and ultimately the
Company’s ability to continue as a going concern, is dependent upon exploration results which indicate the potential
for the discovery of economically recoverable reserves and resources, and the Company’s ability to finance exploration
of its projects through debt and/or equity financings and the optioning and/or sale of resource or resource-related
assets such as royalty interests for its funding.
The Company reported a net loss of $2,109,463 for the period ended September 30, 2014 (2013 - $2,385,266) and
has an accumulated deficit of $18,284,226 (December 31, 2013 - $17,015,956). In addition to its ongoing 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.
The Company's financial statements have been presented on the basis that the Company will continue as a going
concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of the
business. As of September 30, 2014, the Company had a working capital deficit of $1,399,580, including cash of
$181,686, compared to working capital of $1,068,930, including cash of $1,429,699, as at December 31, 2013.
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.
The Company also has access to the Lambert Equity Agreement but cannot provide any assurances that it will be
successful in securing the financing under the Equity Agreement.
Management is continuing to actively pursue strategies to realize on the potential of its assets or secure additional
financings in order to funds its operations. The Company intends to seek equity financings through private placements
and/or public offerings. The Company will require additional funding in the near future in order to obtain the necessary
working capital for general overhead and to further its intended exploration efforts.
While the Company cannot provide any assurances that it will be successful in securing equity financings in order to
conduct its operations uninterruptedly, it is the Company’s intention to obtain the required funding. Management is
continuing to actively pursue strategies to realize on the potential of its assets or secure one or more financings in order to
provide funds for operations. 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 exploration and
evaluation assets could change resulting in a significant impairment to existing assets.
As at the date of this MD&A, the Company had 4,750,000 stock options with an exercise price of $0.25 to $2.35 and
6,671,876 warrants with an exercise price of $0.45 to 0.85 outstanding which, if exercised, would result in cash proceeds
of $14,246,877. There is no assurance that these exercises will occur.
11
Management’s Discussion and Analysis September 30, 2014
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.
Canoe 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.
Changes in Accounting Principles
The accompanying 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.
Future Accounting Pronouncements
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 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.
Critical Accounting Estimates
The Company performed an analysis of risk factors which, if any should realize, could materially and adversely affect
the results, financial position and/or market price of its securities.
12
Management’s Discussion and Analysis September 30, 2014
The preparation of 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 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:
i) Recoverability of Exploration and Evaluation Properties
Management considered the economics of its exploration and evaluation assets, including the drill and
geophysical results.
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, estimated useful lives of capital assets, and
determinations as to whether exploration costs are expensed or capitalized.
While Management believes that these estimates and assumptions are reasonable, actual results may differ
from the amounts included in the financial statements.
iii) Stock-based compensation
Management is required to make certain estimates when determining the fair value of stock options 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.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
Related Party Transactions
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.
13
Management’s Discussion and Analysis September 30, 2014
Proposed Transactions
Except as otherwise disclosed in this MD&A, there are no proposed transactions that have been approved or which
management reasonably believes will be approved by the Board. The Company is in the process of negotiating a
definitive agreement with respect to the LOI described in Significant Events.
Outstanding Share Data
As at the date of this MD&A the following equity instruments are outstanding:
Range of Exercise Number of shares
Prices issued or issuable
Common shares 57,433,123
Stock options $0.25 - $2.35 4,750,000
Warrants $0.45 2,000,000
As of the date of this MD&A, 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. Additionally, Canoe
has 9,701,287 warrants outstanding with a weighted average exercise price of $0.65 and a weighted average
remaining life of 1.26 years.
Corporate Structure
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:
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
14
Management’s Discussion and Analysis September 30, 2014
Risk Factors
Prior to making an investment decision investors should consider the investment risks set out in the Annual Information
Form (“AIF”), located on SEDAR at www.sedar.com, which are in addition to the usual risks associated with an
investment in a business at an early stage of development. The directors of the Company consider the risks set out in
the AIF to be the most significant to potential investors in the Company, but are not all of the risks associated with an
investment in securities of the Company. If any of these risks materialize into actual events or circumstances or other
possible additional risks and uncertainties of which the Directors are currently unaware, or which they consider not to
be material in relation to the Company’s business, actually occur, the Company’s assets, liabilities, financial condition,
results of operations (including future results of operations), business and business prospects, are likely to be
materially and adversely affected. In such circumstances, the price of the Company’s securities could decline and
investors may lose all or part of their investment. relating to the Company.
Internal Controls over Financial Reporting
Disclosure Controls and Procedures (“DC&P”)
The Company has established disclosure controls and procedures to ensure that information disclosed in this MD & A
and the related condensed consolidated interim financial statements was properly recorded, processed, summarized
and reported to the Company’s Board and Audit Committee. The Company’s certifying officers conducted or caused to
be conducted under their supervision an evaluation of the disclosure controls and procedures as required under
Canadian Securities Administration regulations, as at September 30, 2014. Based on the evaluation, the Company’s
certifying officers concluded that the disclosure controls and procedures were effective to provide a reasonable level of
assurance that information required to be disclosed by the Company in its annual filings and other reports that it files or
submits under Canadian securities legislation is recorded, processed, summarized and reported within the time period
specified and that such information is accumulated and communicated to the Company’s management, including the
certifying officers, as appropriate to allow for timely decisions regarding required disclosure.
It should be noted that while the Company’s certifying officers believe that the Company’s disclosure controls and
procedures provide a reasonable level of assurance and that they are effective, they do not expect that the disclosure
controls and procedures will prevent all errors and fraud. A control system, no matter how well conceived or operated,
can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
Internal Control over Financial Reporting (“ICFR”)
The Company’s certifying officers acknowledge that they are responsible for designing internal controls over financial
reporting, or causing them to be designed under their supervision in order to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
IFRS.
The Company did not have any significant changes to its ICFR systems from the date of its last MD&A.
Limitations of Controls and Procedures
The Company’s management, including the Chief Executive Officer and Chief Financial Officer, believe that any
disclosure controls and procedures or internal controls over financial reporting, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they
cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been
prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty,
and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control.
The design of any systems of controls also is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due
to error or fraud may occur and not be detected.
15
Management’s Discussion and Analysis September 30, 2014
Forward-Looking Statements
All statements made in this MD&A, other than statements of historical fact, are forward-looking statements. The
Company’s actual results may differ significantly from those anticipated in the forward-looking statements and readers
are cautioned not to place undue reliance on these forward-looking statements. Except as required by securities
regulations, the Company undertakes no obligation to publicly release the results of any revisions to forward-looking
statements that may be made to reflect events or circumstances after the date of this MD&A or to reflect the
occurrence of unanticipated events. Forward-looking statements include, but are not limited to, statements with respect
to the future metal prices, success of exploration activities, permitting time lines, currency fluctuations, requirements
for additional capital, environmental risks, unanticipated reclamation expenses, title disputes or claims, limitations on
insurance coverage and the timing and possible outcome of pending litigation.
In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does
not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not
anticipate”, or “believes”, or variations of such words and phrases, or state that certain actions, events or results “may”,
“could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of
the Company to be materially different from any future results, performance or achievements expressed or implied by
the forward-looking statements. Such factors include, among others, risks related to the integration of acquisitions;
future price of metals; accidents, labour disputes and other risks of the mining industry; delays in obtaining
governmental approvals or financing.
Although the Company has attempted to identify important factors that could cause actual actions, events or results to
differ materially from those described in forward-looking statements, there may be other factors that cause actions,
events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking
statements will prove to be accurate, as actual results and future events could differ materially from those anticipated
in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
02 January 2015
Sponsor: Sasfin Capital (a division of Sasfin Bank Limited)
16
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