Wrap Text
Interim financial statements and Management Discussion Analysis
Giyani Gold Corporation
(Incorporated and registered in Canada)
(Registration number BC-C0887454)
Share code on the TSXV: WDG
Share code on the NSX: GGC
Share code on the JSE: GIY ISIN: CA37636L1076
(“Giyani Gold” or “the company” or “the group”)
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
AND
MANAGEMENT DISCUSSION ANALYSIS
(Expressed in Canadian Dollars)
(Unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014
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.
GIYANI GOLD CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(Expressed in Canadian Dollars)
(Unaudited)
AS AT
June 30, December 31,
2015 2014
ASSETS
Current
Cash $ 42,094 $ 33,965
Restricted cash (Note 5) 5,000 5,000
Amounts receivable (Note 14) 42,879 67,851
Prepaids 26,055 51,062
116,028 157,878
Equipment (Note 6) 47,066 57,181
Mineral property acquisition costs (Note 7) 5,680,292 5,680,292
Exploration and evaluation assets (Note 7) 5,588,843 6,285,394
$ 11,432,229 $ 12,180,745
LIABILITIES
Current
Accounts payable and accrued liabilities $ 959,639 $ 1,026,838
Promissory note (Note 8) 64,400 62,962
Debenture (Note 9) 416,161 466,161
Amounts due to related party (Note 14) 457,511 347,264
1,897,711 1,903,225
EQUITY
Share capital (Note 10) 18,520,824 18,173,796
Contributed surplus (Note 11) 5,090,180 5,090,180
Warrants (Note 12) 4,093,233 4,093,233
Cumulative translation adjustment 55,256 18,363
Deficit (19,790,379) (18,926,330)
7,969,114 8,449,242
Non-controlling interest (Note 18) 1,565,404 1,828,278
9,534,518 10,277,520
$ 11,432,229 $ 12,180,745
Approved and authorized by the Board on August 11, 2015:
“Roger Laine” Director “Scott Kelly” Director
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
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 six For the six
months months months months
ended ended ended ended
June 30, June 30, June 30, June 30,
2015 2014 2015 2014
EXPENSES
Corporate, general and administration $ 373,164 $ 460,416 $ 699,051 $ 874,008
Amortization (Note 6) 2,869 5,192 5,737 8,796
Financing fee (Note 19) - 150,000 - 150,000
Stock-based compensation (Note 11) - 47,429 - 734,679
Write down of exploration and evaluation
assets (Note 7) 774,565 - 774,565 -
Net loss before interest and other items 1,150,598 663,037 1,479,353 1,767,483
Foreign exchange loss (gain) - 174 (82) (1,848)
Interest and other income (23,363) (19,877) (48,135) (43,387)
Gain on disposal of equipment - - (47) -
Other income on settlement of flow-through
premium obligation - (49,510) - (49,510)
Recovery of accounts payable - (5,598) - (5,598)
Net loss for the period 1,127,236 588,226 1,431,089 1,667,140
Other Comprehensive Income
Items that may be subsequently
reclassified to profit and loss
Currency translation adjustment 29,410 63,979 (36,893) 27,999
Comprehensive loss for the period $ 1,156,646 $ 652,205 $ 1,394,196 $ 1,695,139
Attributable to:
Owners of the parent $ 89,748 $ 545,202 $ 823,893 $ 1,429,669
Non-controlling interest 537,488 43,024 607,196 237,471
Net loss for the period $ 1,127,236 $ 588,226 $ 1,431,089 $ 1,667,140
Basic and diluted loss per common share $ 0.02 $ 0.01 $ 0.02 $ 0.03
Weighted average number of
common shares outstanding 61,327,574 55,073,483 59,391,106 55,026,293
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
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, 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 (Note 4) - - - 34,636 905,853 525,538 1,466,027
Shares issued as financing fee 454,545 150,000 - - - - - 150,000
Share issue costs 4,847) - - - - (4,847)
Options granted by subsidiary - 182,392 136,256 - 318,648
Stock-based compensation - 416,031 - - 416,031
Currency translation adjustment - - - (27,999) - (27,999)
Net loss for the period - - (237,471) - (1,429,669) (1,667,140)
Balance, June 30, 2014 55,433,123 17,577,696 5,081,394 4,089,273 ,893,934 28,895 (17,903,726) 10,767,466
Shares of subsidiary issued to
non-controlling interest - - - 536,783 - 122,257 663,000
Private placement 2,000,000 600,000 - - - 600,000
Share issue costs (3,900) - - (3,900)
Options granted by subsidiary 875 1,010 1,884
Stock-based compensation 7,911 - - 7,911
Currency translation adjustment - - (10,532) (10,532)
Net loss for the period - (603,449) - (1,144,861) (1,748,310)
Balance, December 31, 2014 57,433,123 18,173,796 5,090,180 4,093,233 1,828,278 18,363 (18,926,330) 10,277,520
Shares of subsidiary issued to
non-controlling interest - - 344,322 - (40,156) 304,166
Private placement 4,000,000 200,000 200,000
Shares issued for debt 1,837,857 147,028 147,028
Currency translation adjustment - - 36,893 36,893
Net loss for the period - - - (607,196) - (823,893) (1,431,089)
Balance, June 30, 2015 63,270,981 $18,520,824 $ 5,090,180
$4,093,233 $1,565,404 $55,256 $(19,790,379) $9,534,518
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
GIYANI GOLD CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Expressed in Canadian Dollars)
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30
2015 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (1,431,089) $ (1,667,140)
Non-cash items:
Accrued interest expense 1,438 3,619
Amortization 5,737 8,796
Financing fee - 150,000
Stock-based compensation - 734,679
Recovery on accounts payable ¤ - (5,598)
Other income on settlement of flow-through premium - (49,510)
Loss on disposal of equipment (47) -
Write down on exploration and evaluation assets 774,565 -
Changes in non-cash working capital items:
Receivables 60,092 61,017
Prepaid expenses 25,007 23,435
Accounts payable and accrued liabilities 48,888 (294,684)
Amounts due to related parties 269,775 (15,096)
(245,634) (1,050,482)
CASH FLOWS FROM INVESTING ACTIVITIES
Redemption of term deposit - 150,583
Exploration and evaluation asset expenditures (62,707) (286,095)
Debenture repayment (50,000) -
Acquisition of Birch Hill Gold Corp. - (109,114)
(112,707) (244,626)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of shares 365,000 5,120
Share issue costs - (4,847)
Restricted cash - 50,000
365,000 50,273
Effect of foreign exchange on cash 1,470 (16,281)
Change in cash during the period 8,129 (1,261,116)
Cash, beginning of period 33,965 1,429,699
Cash, end of period $ 42,094 $ 168,583
Supplemental disclosure with respect to cash flows (Note 11)
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
GIYANI GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
For the six months ended June 30, 2015 and 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 condensed consolidated interim financial statements have been prepared using International Financial Reporting
Standards (“IFRS”) applicable to a “going concern”, which assume that the Company will continue in operation for the
foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.
The Company reported a net loss of $1,431,089 for the period ended June 30, 2015 (2014 - $1,667,140) and had an
accumulated deficit of $19,790,379 at June 30, 2015 (December 31, 2014 - $18,926,330).
In addition to its working capital requirements, the Company must secure sufficient funding for existing commitments
and exploration costs.
These circumstances indicate the existence of material uncertainty that 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 June 30, 2015 in the statement of financial
position is dependent upon the ability of the Company to arrange appropriate financing to complete the 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, 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. All dollar
amounts presented are in Canadian dollars unless otherwise specified.
These condensed consolidated interim financial statements incorporate the financial statements of the Company and
its wholly controlled subsidiaries. Control exists when the Company has the power, directly or indirectly, to govern the
financial and operating policies of an entity so as to obtain benefits from its activities. All intercompany transactions
and balances have been eliminated.
Company
Ownership Place of Method of
Entity Name (%) Incorporation Functional Currency Consolidation
Canoe Mining Ventures Corp. (Note 22) 39.1 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
(1)
Rock Island Trading 17 (Pty) Ltd. 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.
Critical accounting estimates and Judgments
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. Where an indicator of impairment exists, management will perform an impairment test and if
the recoverable amount is less than the carrying value, record an impairment charge. Refer to note 6 for the details
of the impairment charge recorded in these condensed consolidated interim financial statements.
(ii) Stock-based compensation
Management is required to make certain estimates when determining the fair value of stock option awards and
compensatory warrants. These estimates require the input of highly subjective assumptions including the expected
price volatility 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 and the value attributed to warrants issued as compensation for assets.
Critical accounting estimates and Judgments (cont’d…)
(iii) Other accounting estimates and judgments
Other estimates and judgments included the benefits of future income tax assets and whether or not to recognize
the resulting assets on the statement of financial position, and determinations as to whether exploration costs
should be expensed or capitalized.
While Management believes that these estimates and judgments are reasonable, actual results may differ from the
amounts included in the condensed consolidated interim financial statements.
3. SIGNIFICANT ACCOUNTING POLICIES
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.
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 7) ,983,041
Accounts payable and accrued liabilities (554,457)
Promissory note (Note 8) (63,464)
Debenture (Note 9) (790,594)
Net assets $1,582,183
5. RESTRICTED CASH
The Company has credit cards with a major financial institution with an aggregate credit limit of $5,000 (December 31,
2014 - $5,000). The financial institution holds a $5,000 (December 31, 2014 - $5,000) 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.
6. EQUIPMENT
Furniture
and Mining and Computer Phone
Fixtures Exploration Equipment Equipment Total
Cost
Balance,
December 31, 2013, $31,186 $21,724 $23,365 $42,243 $118,518
Dispositions for the year - - (2,190) - (2,190)
Balance, December 31, 2014 31,186 21,724 21,175 42,243 116,328
Dispositions for the period - - - (9,500) (9,500)
Balance, June 30, 2015 $31,186 $21,724 $21,175 $32,743 $106,828
Accumulated depreciation
Balance, December 31, 2013 $8,971 $12,896 $12,764 $8,303 $42,934
Depreciation for the year 3,174 4,858 6,639 2,852 17,523
Dispositions for the year - - (1,310) - (1,310)
Balance, December 31, 2014 12,145 17,754 18,093 11,155 59,147
Dispositions for the period - - - (5,122) (5,122)
Depreciation for the period 1,360 1,566 1,670 1,141 5,737
Balance, June 30, 2015 $13,505 $19,320 $19,763 $7,174 $59,762
Net book value
As at December 31, 2014 $19,041 $3,970 $3,082 $31,088 $57,181
As at June 30, 2015 $17,681 $2,404 $1,412 $25,569 $47,066
7. EXPLORATION AND EVALUATION ASSETS
Mineral Property Acquisition Costs
Acquisition costs for Rock Island, South Africa
Balance, June 30, 2015, December 31, 2014, and 2013 $5,680,292
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, 2013 $1,748,823
Current expenditures 104,300
Currency Translation Adjustment (15,232)
Balance, December 31, 2014 1,837,891
Current expenditures 52,470
Currency Translation Adjustment 39,725
Balance, June 30, 2015 $1,930,086
Canada – Iron Lake Gold Project Killins Emerald Abbie Lake Keating Total
Balance, December 31, 2013 $267,200 $467,018 $617,281 $298,946 $1,650,445
Acquisition costs - 103,750 - - 103,750
Current expenditures - - 180,000 - 180,000
Write-down of property (267,200) (570,768) - (298,946) (1,136,914)
Balance, December 31, 2014 - - 797,281 - 797,281
Current expenditures (recoveries) - 617 (23,333) (22,716)
Write-down (recovery) of property - - (797,898) 23,333 (774,565)
Balance, June 30, 2015 $- $- $- $- $-
Hamlin Deaty
Canada Creek Coldstream Kerrs Total
Balance, December 31, 2013 $- $- $- $-
Acquisition costs 330,000 2,875,827 110,027 3,315,854
Current expenditures - 334,368 - 334,368
Balance, December 31, 2014 330,000 3,210,195 110,027 3,650,222
Current expenditures - 7,977 58 8,535
Balance, June 30, 2015 $330,000 $3,218,172 $110,585 $3,658,757
Total exploration and evaluation assets
December 31, 2014 $6,285,394
June 30, 2015 $5,588,843
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 June 30, 2015 and December 31, 2014, the
Company had advanced $1,748,823 to Rock Island for exploration work.
The Company’s exploration permits expired on July 10, 2015. Prior to expiry, an application to extend for a three year
retention permit was submitted to the Department of Mineral Resources. This application was submitted by Giyani’s
partner CMR. At the time, no competing applications were submitted.
Northern Ontario, Canada
UCEL Option Agreement
Canoe 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.
Pursuant to an amending agreement dated January 23, 2013, Canoe renegotiated the Initial Work Program to be
$600,000 prior to December 31, 2013 with an aggregate total of $1,000,000 by December 31, 2014. Pursuant to an
amending agreement dated October 28, 2013, Canoe renegotiated the Initial Work Program to be $600,000 prior to
June 30, 2014 and an aggregate total of $1,000,000 by June 30, 2015. As at June 30, 2015, $614,546 has been
incurred relating to the Initial Work Program (excluding acquisition costs) on the Abbie Lake Property and the June 30,
2014 work commitment has been satisfied. The Company did not complete the June 30, 2015 commitment and is in
default on the option.
Canoe 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 Canoe 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. Canoe must pay a 2% NSR on the sale
or disposition of minerals covered under the UCEL Agreement, provided however that Canoe may purchase 1.5% of
the NSR at any time upon 30 days’ notice in writing in consideration for the sum of $750,000.
During the period ended June 30, 2015, the Company completed a strategic review of the Company’s priorities and
elected to write-down the value of the Abbie Lake Property to $nil. The Company is in default on the option and intends
to abandon the property.
Keating Property, Ontario
Canoe 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.
During the year ended December 31, 2014, Canoe elected to prioritize certain assets given the difficult economic
conditions for financing exploration projects; therefore, Canoe has written-down the Keating Property in the amount of
$347,893 as at December 31, 2014. Canoe is in default on the option and intends to abandon the property.
Northern Ontario, Canada (cont’d…)
Keating East
On March 21, 2012, Canoe 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 Canoe's Abbie Lake Property and then to have these Lands included in the licensing agreement with
Michipicoten.
During the year ended December 31, 2014, Canoe elected to prioritize certain assets given the difficult economic
conditions for financing exploration projects; therefore, Canoe has written-down the Keating East Property in the
amount of $505,604 as at December 31, 2014. Canoe is in default on the option and intends to abandon the property.
Killen Agreement
On July 12, 2012, Canoe executed a licensing agreement with a private arm’s length party (“Killen Agreement”). The
Killen Agreement entitles Canoe 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.
During the year ended December 31, 2014, Canoe elected to prioritize certain assets given the difficult economic
conditions for financing exploration projects; therefore, Canoe has written-down the Killen Property in the amount of
$283,417 as at December 31, 2014. Canoe is in default on the option and intends to abandon the property.
Hamlin-Deaty Creek Property, Ontario
On May 12, 2014, Canoe 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, Canoe made a cash payment of $50,000 to Glencore 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 Canoe valued $280,000 in aggregate during the year ended December
31, 2014.
The underlying 2% NSR held by the original vending prospectors may be purchased by Canoe under the following
terms: a 1% NSR may be purchased at any time for $1,000,000 and Canoe maintains the first right of refusal to
purchase the remaining 1% NSR.
Coldstream Property, Ontario
With the acquisition of Birch Hill, Canoe 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 Canoe’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. Canoe 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 Canoe for $1,000,000
prior to a production decision on the Coldstream Property and $2,000,000 thereafter.
Northern Ontario, Canada (cont’d…)
Coldstream Property, Ontario (cont’d…)
Contingency
Canoe 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, Canoe 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%.
8. PROMISSORY NOTE
In connection with the Amalgamation with Birch Hill, Canoe 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 $64,400 as of June 30, 2015 which includes $6,400 of
accrued interest expense. The promissory note is currently being renegotiated.
9. 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 Canoe’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. In the year ended December 31, 2014, Canoe 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 Canoe on the Settlement Date at a deemed value
of $250,000 (issued at a value of $250,000);
b) $50,000 on the Settlement Date (paid);
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 Canoe fails to meet the terms of the Settlement, Alto will maintain the right to enforce its claims under the original
terms of the debenture.
Canoe is currently in default with the payment schedule of the Settlement. Canoe has recognized the full carrying value
of the debenture pursuant to the original debenture agreement in accordance with the provisions of the Settlement.
Canoe will settle outstanding balances of the debenture with the completion of a future financing.
2014
Principal acquired from Birch Hill $766,161
Accrued interest acquired from Birch Hill 24,433
Acquired balance, June 3, 2014 790,594
Payments (300,000)
Accrued interest expense 17,506
Adjustment to Settlement (41,939)
Closing balance, December 31, 2014 $466,161
Payments (50,000)
Balance, June 30, 2015 $416,161
10. SHARE CAPITAL
a) Authorized share capital
Unlimited number of common shares without par value.
b) Issued share capital
Shares issued in the period ended June 30, 2015
During the period ended June 30, 2015, the Company:
a) Completed a non-brokered private placement of 4,000,000 common shares of the Company at a price of
$0.05 per share gross proceeds of $200,000. As at June 30, 2015, $35,000 was included in receivables with
respect to funds for the private placement.
b) Issued 1,837,857 common shares valued at $147,028 to settle accounts payable and accrued liabilities and
amounts due to related parties
Shares issued in the year ended December 31, 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 19).
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.
In October 2014, Canoe issued 866,667 units pursuant to a non-brokered private at a price of $0.15 per unit for
gross proceeds of $133,000. Each unit consists of one common share and one-half share purchase warrant. Each
whole warrant entitles the holder to acquire an additional common share of the Company at a price of $0.25
expiring October 22, 2016. Under the residual value method, the warrants were ascribed a value of $8,867.
11. 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, 2013 2,700,000 $1.53
Granted 2,150,000 0.25
Forfeited (100,000) 1.30
Balance, December 31, 2014 4,750,000 0.96
Forfeited (1,000,000) 1.24
Balance, June 30, 2015, outstanding and exercisable 3,750,000 $0.89
Stock options outstanding as at June 30, 2015:
Weighted Average
Life Remaining
Expiry Date Exercise Price (Years) Options Outstanding
November 3, 2015 $1.30 0.35 500,000
June 24, 2016 2.00 0.99 300,000
August 30, 2016 2.35 1.17 75,000
July 11, 2017 1.30 2.03 1,025,000
October 18, 2017 1.30 2.30 100,000
March 4, 2019 0.25 3.68 1,750,000
0.89 3,750,000
The Company’s subsidiary, Canoe, has 2,000,000 stock options outstanding which are exercisable at $0.25 until
February 27, 2019.
Stock-based compensation
During the period ended June 30, 2014, the Company granted 2,150,000 options to directors, officers and consultants.
The weighted average fair value of options granted and vesting during the year was $0.19.
Total stock-based compensation recognized in the statement of loss and comprehensive loss for the period ended
June 30, 2014 was $734,679. Of this amount, $416,031 relates to options granted and vesting in the Company. The
balance of $318,648 relates to the value of stock options granted by the Company’s subsidiary, Canoe.
Stock-based compensation (cont’d…)
The following weighted average assumptions were used for the valuation of stock options granted by the Company:
2015 2014
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%
Forfeiture rate -% 0.00%
12. WARRANTS
Warrant transactions are summarized as follows:
Number of Warrants Weighted Average
Outstanding Exercise Price
Balance, December 31, 2013 4,671,876 $1.88
Granted 2,000,000 0.45
Expired (4,671,876) 1.88
Balance, December 31, 2014 and June 30, 2015 2,000,000 $0.45
Warrants outstanding as at June 30, 2015:
Weighted Average
Life Remaining Warrants
Expiry Date Exercise Price (Years) Outstanding
July 11, 2016 $0.45 1.03 2,000,000
The Company’s subsidiary, Canoe, has 9,091,080 warrants outstanding with a weighted average exercise price of
$0.67 and a weighted average remaining life of 0.60 years.
13. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
The significant non-cash transactions during the period ended June 30, 2015 included
a) Accruing exploration and evaluation expenditures of $274,393 through accounts payable and accrued liabilities;
b) Issuing 1,837,857 common shares valued at $147,028 to settle accounts payable and accrued liabilities and
amounts due to related parties; and
c)Issuing 2,083,308 shares of Canoe at a deemed price of $0.05 per share for total debt settlement of $104,166.
The significant non-cash transactions during the period ended June 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 7)
and issuing 454,545 common shares valued at $150,000 as a financing fee (Note 19).
14. RELATED PARTY TRANSACTIONS
Management Compensation
Remuneration of directors and key management personnel of the Company was as follows:
2015 2014
Payments to key management personnel:
Cash compensation $8,860 $187,201
Stock-based compensation - 319,027
Management and consulting fees of $8,860 (2014 - $187,201) were paid to officers and directors or to companies
controlled by officers or directors.
During the year ended June 30, 2015, the Company incurred legal fees of $Nil (2014 - $133,815) with a legal firm
where a partner is a Director of a significant subsidiary of the Company. As at June 30, 2015, $86,709 (December 31,
2014 - $84,542) was included in accounts payable and accrued liabilities with respect to these fees and certain
expenses paid on the company's behalf.
During the period ended June 30, 2015, the Company issued 1,556,607 common shares at a price of $0.05 per share
for total debt settlement of $124,529 with related parties. As at June 30, 2014, $35,000 was included in receivables for
funds due from an officer with respect to the private placement completed in the period.
15. 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 19, there were no externally imposed capital requirements to which the
Company is subject as at June 30, 2015.
16. 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 1. 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 (cont’d…)
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 June 30, 2015 of $42,094 (December 31, 2014 - $33,965). At June 30, 2015, the Company
had accounts payable and accrued liabilities and due to related parties of $1,382,150 (December 31, 2014 -
$1,374,102). Additionally, the Company is liable for a promissory note of $64,400 past due and the repayment terms
on the debenture as per Note 9.
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.
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 $95,984
Accounts receivable 54,501
Accounts payable and accrued liabilities 2,160,790
Based on the net exposure at June 30, 2015, a 10% depreciation or appreciation of the South African rand
against the Canadian dollar would result in approximately a $20,646 increase or decrease in the Company’s
comprehensive loss for the period.
Financial risk factors (cont’d…)
Market Risk (cont’d…)
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.
17. 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
June 30, 2015 Canoe Mining Corporate Total
Property and equipment $- $- $47,066 $47,066
Exploration and evaluation 3,658,757 1,930,086 - 5,588,843
Total assets 3,695,680 7,625,833 110,716 11,432,229
Total liabilities 1,122,432 221,913 616,366 1,897,711
Net loss 1,035,045 3,680 392,363 1,431,088
Net additions to
exploration and evaluation assets (14,181) 92,195 - 77,457
South Africa
December 31, 2014 Canoe Mining Corporate Total
Property and equipment $- $- $57,181 $57,181
Exploration and evaluation 4,447,503 1,837,891 - 6,285,394
Total assets 4,486,565 7,533,512 160,668 12,180,745
Total liabilities 1,182,438 206,789 513,998 1,903,225
Net (profit) loss 1,714,872 (83,012) 1,783,590 3,415,450
Net additions to
exploration and evaluation assets 3,933,973 89,068 - 4,023,040
18. NON-CONTROLLING INTEREST
On December 5, 2013, Canoe entered into the Amalgamation Agreement with 2299895 and Giyani to carry out a QT.
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 June 30, 2015 is 39.1%.
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 year
For the three ended
months ended December 31,
June 30, 2015 2014
Balance, beginning of period $1,828,278 $1,066,787
Change in non-controlling interest 344,322 1,465,145
Stock-based compensation in Canoe - 137,266
Share of loss attributing to non-controlling interests (607,196) (840,920)
Balance, end of period $1,565,404 $1,828,278
Set out below is summary financial information for Canoe, in which the Company holds a 39.1% interest (2014 –
57.4%). The amounts disclosed are based on those included in the condensed consolidated interim financial
statements, before intercompany eliminations.
December 31,
Summarized consolidated statement of financial position June 30, 2015 2014
Current assets $36,923 $39,062
Current liabilities (1,122,432) (1,182,438)
(1,085,509) (1,143,356)
Non-current assets 3,658,757 4,447,503
Net assets 2,573,248 3,304,127
Accumulated non-controlling interest $1,565,404 $1,828,278
December 31,
Summarized consolidated statement of loss and comprehensive loss June 30, 2015 2014
Non-controlling interest percentage 60.9% 55.3%
Expenses $260,480 $833,692
Net loss and comprehensive loss 1,035,045 1,649,871
Loss allocated to non-controlling interest $607,196 $840,920
December 31,
Summarized consolidated statement of cash flows June 30, 2015 2014
Non-controlling interest percentage 60.9% 55.3%
Cash flows from operating activities $(76,564) $(996,982)
Cash flows from financing activities 200,000 138,120
Cash flows from investing activities (112,708) (452,056)
Of total cash and cash equivalents as of June 30, 2015, $10,117 (December 31, 2014 - $9,852) 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.
19. COMMITMENTS
The Company has the following obligations under operating leases over the next five years.
2015 2016 2017 2018 2018
Rent (Oakville office) $71,432 $95,243 $7,937 $- $-
Financing Agreement
During the year ended December 31, 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.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014
DATED AUGUST 11, 2015
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
six months ended June 30, 2015 and 2014 and consolidated financial statements for the year ended December 31, 2014.
Those statements were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations
Committee. 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.
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”. The Company is in the process of submitting applications to delist from the JSE and
NSX.
Canoe Mining Ventures Corp. (“Canoe”) is, as of June 30, 2015, owned 39.1% by the Company, and its financial results are
consolidated with the Company.
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 $1,431,089 for the six months ended June 30, 2015 (2014 - $1,667,140) and had an
accumulated deficit of $19,790,379 at June 30, 2015 (December 31, 2014 - $18,926,330). In addition to its working capital
requirements, the Company must secure sufficient funding for existing commitments and exploration costs.
These circumstances indicate the existence of material uncertainty that 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 June 30, 2015 in the statement of financial
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.
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.
Corporate Update
Giyani's exploration permits comprise the Giyani Gold Project in South Africa. Management's belief is that a sizable gold
deposit may exist near the historic mining sites contained in these permits. Giyani's exploration permits expired on July 10,
2015. Prior to expiry, an application to extend for a three year retention permit was submitted to the Department of Mineral
Resources. This application was submitted by Giyani’s partner the state-owned Corridor Mining Resources (“CMR”). At the
time, no competing applications were submitted.
Giyani continues to work towards recovering the funds owed to it by CMR, its joint venture partner on the Giyani Gold Project,
and is holding conversations relating to increasing Giyani's ownership position in the region.
Significant Events
Non-brokered Private Placement
During the period ended June 30, 2015, the Company completed a non-brokered private placement of 4,000,000 common
shares of the Company at a price of $0.05 per share for gross proceeds of $200,000 of which $35,000 was included in
receivables as at June 30, 2015.
Debt settlement
During the period ended June 30, 2015, the Company issued 1,837,857 common shares valued at $147,028 to settle accounts
payable and accrued liabilities and amounts due to related parties.
Canoe Transactions
On March 30, 2015, Canoe completed a non-brokered private placement of 4,000,000 common shares of the Company at a
price of $0.05 per share for gross proceeds of $200,000.
Debt Settlement
On June 10, 2015, Canoe issued 2,083,308 shares at a deemed price of $0.05 per share for total debt settlement of $104,166.
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.
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.
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%.
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, 2013 $1,748,823
Expenditures for the year 104,300
Currency translation adjustment (15,232)
Balance, December 31, 2014 1,837,891
Expenditures for the year 52,470
Currency translation adjustment 39,725
Balance, June 30, 2015 $1,930,086
Coldstream Property, Ontario (Canoe Mining Ventures Corp.)
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.
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. Birch Hill 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 Project 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
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 the accompanying condensed consolidated interim financial
statements for the period ended June 30, 2015.
Hamlin-Deaty Coldstream Kerrs
Creek Property Property Property Total
Balance, December 31, 2013 $- $- $- $-
Acquisition costs 330,000 2,875,827 110,027 3,315,854
Exploration expenditures - 334,368 - 334,368
Balance, December 31, 2014 330,000 3,210,195 110,027 3,650,222
Exploration expenditures - 7,977 558 8,535
Balance, June 30, 2015 $330,000 $3,218,172 $110,585 $3,658,757
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 terms of the option and license agreements for the properties included in the Iron Lake Gold Project package are detailed
in the consolidated financial statements for the year ended December 31, 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, 2013 $617,281 $1,033,164 $1,650,445
Acquisition costs - 103,750 103,750
Exploration expenditures 180,000 - 180,000
Write-down of property - (1,136,914) (1,136,914)
Balance, December 31, 2014 797,281 - 797,281
Exploration expenditures 617 (23,333) (22,716)
Write-down of property (797,898) 23,333 (774,565)
Balance, June 30, 2015 $ $ $
During the year ended December 31, 2014, the Company elected to prioritize certain assets given the difficult economic
conditions for financing exploration projects; therefore, the Company has written-down the Keating Property in the amount of
$1,136,914 as at December 31, 2014. During the period ended June 30, 2015, the Company completed a strategic review of
the Company’s priorities and elected to write-down the value of the Abbie Lake Property in the amount of $797,898 as at June
30, 2015. The Company is in default on the Iron Lake Property option agreements and intends to abandon the properties.
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.
Canoe intends to expand on its exploration programs in fiscal 2015 on its Ontario properties. Additional funds will need to b e
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.
Giyani Gold Corp.
The Company’s primary objectives include evaluating prospective exploration and production acquisition properties in South
Africa to support the Company’s strategic focus on Southern Africa. The Company continues to evaluate possible investment
and business opportunities in various sectors, including but not limited to: mining, oil and gas, financial services, technology,
and biotechnology.
The Company is in the process of submitting applications to delist from the JSE and the NSX.
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)
June 30, 2015 $- $1,127,236 $0.02
March 31, 2015 303,853 0.01
December 31, 2014 1,704,076 0.02
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 1,569,659 0.03
September 30, 2013 692,252 0.01
Significant fluctuations to the net loss of the Company over the periods presented include:
- 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 4 of the consolidated financial statements for the period ended December 31,
2014).
- Stock-based compensation expense of $734,679 for options granted and vesting in the three months ended March 31,
2014 for options of the Company and Canoe.
- A write-down of exploration and evaluation assets of $1,136,914 in the three months ended December 31, 2014 on the
Keating, Keating East and Killen properties.
- A write-down of exploration and evaluation assets of $774,565 on the Abbie Lake Property in the three months ended
June 30, 2015.
Results of Operations for the six months ended June 30, 2015 compared to 2014
The Company had a net loss of $1,431,089 for the six months ending June 30, 2015, compared to a loss of $1,667,150 for the
previous period.
Corporate, general and administration expenses decreased from $874,008 for the period ended June 30, 2014 to $699,051 for
the current period. In general, this is due to lower activity in the current period while the Company evaluates its opportunities.
Management and consulting fees included in the corporate overhead decreased from $497,700 in 2014 to $395,691 in the
current period as the Company has reduced compensation to directors and officers as of November 2014. Investor relations
for the six months ended June 30, 2015 was $30,500. There were no investor relations expenses in the current period.
Additionally travel expenses for the six months ended June 30, 2015 decreased to $12,886 from $63,064 in the comparative
period.
Stock-based compensation expense of $Nil (2014 - $687,249) is a valuation of the stock options granted to directors, officer
and consultants which were granted in the first quarter of fiscal 2014 by each of the Company and Canoe.
Non-recurring expenses included a write-down of exploration and evaluation assets of $774,565 on the Abbie Lake property in
the current period. In the prior period, the Company incurring a financing expense of $150,000 with respect to the financing
agreement with Lambert.
Overall, the Company is working to manage overhead and reduce expenditures while it evaluates business opportunities.
Results of Operations for the three months ended June 30, 2015 compared to 2014
The Company had a net loss of $1,127,236 for the three months ending June 30, 2015, compared to a loss of $588,226 for the
previous period.
Corporate, general and administration expenses decreased from $460,416 for the period ended June 30, 2014 to $373,164 for
the current period. In general, this is due to lower activity in the current period while the Company evaluates its opportunities.
Management and consulting fees included in the corporate overhead decreased from $254,017 in 2014 to $203,661 in the
current period as the Company has reduced compensation to directors and officers as of November 2014. Investor relations
for the six months ended June 30, 2015 was $13,000. There were no investor relations expenses in the current period.
Additionally travel expenses for the six months ended June 30, 2015 decreased to $8,327 from $45,286 in the comparative
period.
Stock-based compensation expense of $Nil (2014 - $47,429) is a valuation of the stock options granted to directors, officer
and consultants which were granted in the first quarter of fiscal 2014 by each of the Company and Canoe and continued to
vest in the second quarter.
Non-recurring expenses included a write-down of exploration and evaluation assets of $774,565 on the Abbie Lake property in
the current period. In the prior period, the Company incurring a financing expense of $150,000 with respect to the financing
agreement with Lambert.
Overall, the Company is working to manage overhead and reduce expenditures while it evaluates business opportunities.
Liquidity and Capital Resources and Going Concern
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 $1,431,089 for the period ended June 30, 2015 (2014 - $1,667,140) and has an
accumulated deficit of $19,790,379 (December 31, 2014 - $18,926,330). In addition to its ongoing working capital
requirements, the Company must secure sufficient funding for existing commitments and exploration costs. These
circumstances indicate the existence of material uncertainty that 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
December 31, 2014, the Company had a working capital deficit of $1,781,683, including cash of $42,094, compared to a
working capital deficit of $1,745,347, including cash of $33,965, as at December 31, 2014.
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 3,750,000 stock options with an exercise price of $0.25 to $2.35 and 2,000,000
warrants with an exercise price of $0.45 outstanding which, if exercised, would result in cash proceeds of $4,226,250. There is
no assurance that these exercises will occur.
Commitments
The Company has the following obligations under operating leases over the next five years.
2015 2016 2017 2018 2018
Rent (Oakville office) $71,432 $95,243 $7,937 $- $-
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.
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:
(iv) Recoverability of exploration and evaluation properties
Management will consider the economics of its exploration and evaluation assets, including the drill and geophysical
results. Where an indicator of impairment exists, management will perform an impairment test and if the recoverable
amount is less than the carrying value, record an impairment charge. Refer to note 6 for the details of the impairment
charge recorded in these consolidated financial statements.
(v) Stock-based compensation
Management is required to make certain estimates when determining the fair value of stock option awards and
compensatory warrants. These estimates require the input of highly subjective assumptions including the expected price
volatility 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 and the value attributed to warrants issued as compensation for assets.
(vi) Other accounting estimates and judgments
Other estimates and judgments included the benefits of future income tax assets and whether or not to recognize the
resulting assets on the statement of financial position, and determinations as to whether exploration costs should be
expensed or capitalized.
While Management believes that these estimates and judgments are reasonable, actual results may differ from the
amounts included in the consolidated financial statements.
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:
2015 2014
Payments to key management personnel:
Cash compensation $8,860 $187,201
Stock-based compensation - 319,027
Management and consulting fees of $8,860 (2014 - $187,201) were paid to officers and directors or to companies controlled
by officers or directors.
During the year ended June 30, 2015, the Company incurred legal fees of $Nil (2014 - $133,815) with a legal firm where a
partner is a Director of a significant subsidiary of the Company. As at June 30, 2015, $86,709 (December 31, 2014 - $84,542)
was included in accounts payable and accrued liabilities with respect to these fees and certain expenses paid on the
company's behalf.
During the period ended June 30, 2015, the Company issued 1,556,607 common shares at a price of $0.05 per share for total
debt settlement of $124,529 with related parties. As at June 30, 2015, $35,000 was included in receivables for funds due from
an officer with respect to the private placement completed in the period.
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.
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 63,280,981
Stock options $0.25 - $2.35 3,750,000
Warrants $0.45 2,000,000
As of March 30, 2015, the date of this MD&A, Canoe has 2,000,000 stock options outstanding which are exercisable at $0.25
until February 27, 2019. Additionally, Canoe has 9,091,080 warrants outstanding with a weighted average exercise price of
$0.67 and a weighted average remaining life of 0.60 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. 39.1 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
(1)
Rock Island Trading 17 (Pty) Ltd. 28.8 South Africa South African Rand Proportionate
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 December 31, 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.
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.
7 October 2015
Sponsor
Sasfin Capital
(a division of Sasfin Bank Limited)
Date: 07/10/2015 01:49:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
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