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BUFFALO COAL CORPORATION - Consolidated Financial Statements for the years ended December 31, 2018 and December 31, 2017

Release Date: 25/04/2019 15:00
Code(s): BUC     PDF:  
 
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Consolidated Financial Statements for the years ended December 31, 2018 and December 31, 2017

BUFFALO COAL CORP.
REGISTRATION NUMBER: 001891261
EXTERNAL COMPANY REGISTRATION NUMBER: 2011/011661/10
SHARE CODE ON THE TSX VENTURE EXCHANGE: BUF
SHARE CODE ON THE JSE LIMITED: BUC
ISIN: CA1194421014
 
CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018 and December 31, 2017
(Presented in South African Rands)


UHY McGovern Hurley LLP 
Chartered professional Accountants 
 
Independent Auditors Report 
 
To the Shareholders of Buffalo Coal Corp. 
 
Opinion 
 
We have audited the consolidated financial statements of Buffalo Coal Corp. and its subsidiaries (the 
Company, which comprise the consolidated statements of financial position as at December 31, 2018 
and 2017, and the consolidated statements of loss and comprehensive loss, consolidated statements of 
changes in equity (deficiency) and consolidated statements of cash flow for the years then ended, and 
notes to the consolidated financial statements, including a summary of significant accounting policies. 
 
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, 
the consolidated financial position of the Company as at December 31, 2018 and 2017, and its consolidated 
financial performance and its consolidated cash flows for the years then ended in accordance with 
International Financial Reporting Standards IFRS. 
 
Basis for opinion 
 
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our 
responsibilities under those standards are further described in the Auditor's responsibilities for the audit of 
the consolidated financial statements section of our report. We are independent of the Company in 
accordance with the ethical requirements that are relevant to our audit of the consolidated financial 
statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these 
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide 
a basis for our opinion. 
 
Material uncertainty related to going concern 
 
We draw attention to Note 2.1 in the consolidated financial statements, which indicates that the Company 
incurred a net loss of ZAR 68,375,322 during the year ended December 31, 2018 and, as of that date, the Company's 
current liabilities exceeds its current assets by ZAR 490,472,424. As stated in Note 2.1, these events or conditions, 
along with other matters as set forth in Note 2.1, indicate that material uncertainties exist that cast significant doubt 
on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter. 
 
Other information 
 
Management is responsible for the other information. The other information comprises Management's Discussion 
and Analysis. 
 
Our opinion on the consolidated financial statements does not cover the other information and we do not 
express any form of assurance conclusion thereon. 
 
In connection with our audit of the consolidated financial statements, our responsibility is to read the other 
information and, in doing so, consider whether the other information is materially inconsistent with the 
consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be 
materially misstated. 
 
We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on  
the work we have performed, we conclude that there is a material misstatement of this other information, 
we are required to report that fact. We have nothing to report in this regard. 

Responsibilities of management and those charged with governance for the consolidated financial 
Statements 

Management is responsible for the preparation and fair presentation of the consolidated financial 
statements in accordance with IFRS, and for such internal control as management determines is necessary 
to enable the preparation of consolidated financial statements that are free from material misstatement, 
whether due to fraud or error. 

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability 
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going 
concern basis of accounting unless management either intends to liquidate the Company or cease operations, or has 
no realistic alternative but to do so. 
 
Those charged with governance are responsible for overseeing the Company's financial reporting process. 
 
Auditor s responsibilities for the audit of the consolidated financial statements 
 
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole 
are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes 
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in 
accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it 
exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they 
could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated 
financial statements. 
 
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional 
judgement and maintain professional skepticism throughout the audit. We also: 
 
     -    Identify and assess the risks of material misstatement of the consolidated financial statements, whether 
          due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit 
          evidence that is sufficient and appropriate to provide a basis for our opinion. The risks of not detecting 
          a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may 
          involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 
     -    Obtain an understanding of internal control relevant to the audit in order to design audit procedures that 
          are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness 
          of the Company's internal control. 
     -    Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates 
          and related disclosures made by management. 
     -    Conclude on the appropriateness of management's use of the going concern basis of accounting and, based 
          on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that 
          may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a 
          material uncertainty exists, we are required to draw attention in our auditor's report to the related 
          disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our 
          opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. 
          However, future events or conditions may cause the Company to cease to continue as a going concern.  
     -    Evaluate the overall presentation, structure and content of the consolidated financial statements, including 
          the disclosures, and whether the consolidated financial statements represent the underlying transactions 
          and events in a manner that achieves fair presentation. 
     -    Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business 
          activities within the Company to express an opinion on the consolidated financial statements. We are 
          responsible for the direction, supervision and performance of the group audit. We remain solely 
          responsible for our audit opinion. 
 
We communicate with those charged with governance regarding, among other matters, the planned scope 
and timing of the audit and significant audit findings, including any significant deficiencies in internal control 
that we identify during our audit. 
 
We also provide those charged with governance with a statement that we have complied with relevant 
ethical requirements regarding independence, and to communicate with them all relationships and other 
matters that may reasonably be thought to bear on our independence, and where applicable, related 
safeguards. 
 
The engagement partner of the audit resulting in this independent auditor's report is Chris Milios. 
 

UHY McGovern Hurley LLP 
 
Chartered Professional Accountants 
Licensed Public Accountants 
 
Toronto, Ontario 
April 24, 2019 
 

Consolidated Statements of Financial Position
(Presented in South African Rands)
                                                                              December 31,      December 31,    December 31,   
                                                                                      2018              2017            2018   
                                                                                                                    (Note 2)   
                                                                   Notes                 R                 R              C$   
Assets                                                                                                                         
Non-current assets                                                                                                             
Property, plant and equipment                                         10        58 483 832       106 885 916       5 537 690   
Investment in financial assets                                        11           194 484           181 465          18 415   
Other receivables - restricted                                        13        54 901 857        53 211 988       5 198 522   
Other receivables                                                     14         7 823 306         5 179 462         740 770   
Long-term restricted cash                                             17        11 200 000        11 200 000       1 060 500   
Total non-current assets                                                       132 603 479       176 658 831      12 555 897   
Current assets                                                                                                                 
Trade and other receivables                                           14        48 284 245       121 244 825       4 571 917   
Inventories                                                           15        41 823 681        38 095 072       3 960 181   
Non-interest bearing receivables                                      16                 -         2 015 578               -   
Current tax assets                                                    25           864 711           864 710          81 877   
Cash and cash equivalents                                             18         5 231 958        21 428 994         495 401   
Total current assets                                                            96 204 595       183 649 179       9 109 376   
Total assets                                                                   228 808 074       360 308 010      21 665 273   
Equity (deficiency) and liabilities                                                                                            
Capital and reserves                                                                                                           
Share capital                                                         19     1 089 305 350     1 082 396 917     103 143 640   
Currency translation reserve                                                 (219 945 085)     (219 945 085)    (20 826 058)   
Reserves                                                              20         9 697 835        14 125 416         918 264   
Accumulated retained loss                                                  (1 285 872 161)   (1 218 681 917)   (121 756 068)   
(Deficiency) attributable to owners of the company                           (406 814 061)     (342 104 669)    (38 520 222)   
Non-controlling interest                                                         4 339 142         4 339 142         410 863   
Total (deficiency)                                                           (402 474 919)     (337 765 527)    (38 109 359)   
Non-current liabilities                                                                                                        
RCF loan facilities                                                   22                 -       314 762 527               -   
Conversion option liability                                           22                 -            28 289               -   
Asset retirement obligation                                           23        44 605 975        30 244 737       4 223 630   
Total non-current liabilities                                                   44 605 975       345 035 553       4 223 630   
Current liabilities                                                                                                            
Trade and other payables                                      24, 28, 29        95 352 468       156 497 655       9 028 690   
Current tax liabilities                                               25           828 558         2 901 399          78 454   
Current portion of borrowings                                         21       100 982 963       187 955 977       9 561 828   
RCF loan facilities                                                   22       381 087 383                 -      36 084 226   
Conversion option liability                                           22         3 132 577                 -         296 616   
Warrant liability                                                     21             7 825            29 507             741   
Current portion of asset retirement obligation                        23         5 285 246         5 653 446         500 447   
Current liabilities                                                            586 677 020       353 037 984      55 551 002   
Total liabilities                                                              631 282 995       698 073 537      59 774 632   
Total equity (deficiency) and liabilities                                      228 808 074       360 308 010      21 665 273   


Commitments and contingencies                                1, 2.1, 29
Subsequent events                                            30

Approved on behalf of the Board:

Signed "Craig Wiggill", Director                Signed "Robert Francis", Director

The accompanying notes are an integral part of the consolidated financial statements.

Consolidated Statements of Loss and Other Comprehensive Loss
(Presented in South African Rands)
                                                                                   Year ended      Year ended     Year ended   
                                                                                 December 31,    December 31,   December 31,   
                                                                        Notes            2018            2017           2018   
                                                                                                                    (Note 2)   
                                                                                            R               R             C$   
Revenue                                                                           758 517 462     738 121 411     71 822 150   
Cost of sales                                                               5   (559 180 192)   (636 407 361)   (52 947 395)   
Gross profit                                                                      199 337 270     101 714 050     18 874 755   
Impairment (loss) on property, plant and equipment                          7    (67 490 402)   (175 624 399)    (6 390 500)   
Other (expense)/income - net                                                6    (48 433 416)      75 986 796    (4 586 041)   
General and administration expenses                                         5    (97 157 802)    (72 301 646)    (9 199 633)   
Loss before the undernoted                                                       (13 744 350)    (70 225 199)    (1 301 419)   
Finance income                                                              8       2 434 622       2 077 824        230 528   
Finance expense                                                             8    (57 016 376)    (54 434 070)    (5 398 740)   
(Loss) before income tax                                                         (68 326 104)   (122 581 445)    (6 469 631)   
Income tax expense                                                          9        (49 218)     (1 107 529)        (4 660)   
(Loss) and total comprehensive (loss) for the year                               (68 375 322)   (123 688 974)    (6 474 291)   

Loss and comprehensive loss attributable to:                                                                                   
- Owners of the parent                                                           (68 375 322)   (123 688 974)    (6 474 291)   
- Non-controlling interest                                                                  -               -              -   
                                                                                 (68 375 322)   (123 688 974)    (6 474 291)   

Net (loss) per share - basic and diluted                                 2.21          (0.16)          (0.31)         (0.02)   
Headline (loss) per share - basic and diluted                                          (0.17)          (0.31)         (0.02)   
Weighted average number of common shares outstanding:                                                                          
- Basic                                                                           414 939 530     402 103 783    414 939 530   
- Diluted                                                                         414 939 530     402 103 783    414 939 530   

The accompanying notes are an integral part of the consolidated financial statements.

Consolidated Statements of Changes in Equity (Deficiency)
(Presented in South African Rands)
                                                                                         Attributable to owners of the Group
                                                                                                    Reserves
                                                                                                Equity-settled                                           Currency                                                      
                                                        No. of           Share                    non-employee    BEE option         Accumulated      translation                  Non-controlling                   
                                  Notes          shares issued         capital   Option reserve       benefits       reserve       retained loss          reserve           Total         interest    Total equity
                                                                             R                R              R             R                   R                R               R                R               R   
Balance at December 31, 2016                       394 803 022   1 075 881 497        2 059 820      2 175 290     9 073 711     (1 095 286 547)    (219 945 085)   (226 041 314)        4 339 142   (221 702 172)   
Shares issued to STA                 19             13 005 259       6 515 420                -              -             -                   -                -       6 515 420                -       6 515 420   
Stock-based compensation             20                      -               -           40 839      1 069 360             -                   -                -       1 110 199                -       1 110 199   
Stock options expired/cancelled      20                      -               -        (293 604)              -             -             293 604                -               -                -               -   
Net (loss) for the year                                      -               -                -              -             -       (123 688 974)                -   (123 688 974)                -   (123 688 974)   
Balance at December 31, 2017                       407 808 281   1 082 396 917        1 807 055      3 244 650     9 073 711     (1 218 681 917)    (219 945 085)   (342 104 669)        4 339 142   (337 765 527)   
Shares issued to STA                 19             13 544 315       6 908 433                -              -             -                   -                -       6 908 433                -       6 908 433   
Stock-based compensation             20                      -               -            2 147    (3 244 650)             -                   -                -     (3 242 503)                -     (3 242 503)   
Stock options expired/cancelled      20                      -               -      (1 185 078)              -             -           1 185 078                -               -                -               -   
Net (loss) for the year                                      -               -                -              -             -        (68 375 322)                -    (68 375 322)                -    (68 375 322)   
Balance at December 31, 2018                       421 352 596   1 089 305 350          624 124              -     9 073 711     (1 285 872 161)    (219 945 085)   (406 814 061)        4 339 142   (402 474 919)   

The accompanying notes are an integral part of the consolidated financial statements.

Consolidated Statements of Cash Flow
(Presented in South African Rands)
                                                                                    Year ended     Year ended     Year ended   
                                                                          Notes   December 31,   December 31,   December 31,   
                                                                                          2018           2017           2018   
                                                                                                                    (Note 2)   
                                                                                             R              R             C$   
Cash flows from operating activities                                                                                           
Cash generated from operations                                               27    116 806 711     58 009 833     11 060 140   
Interest received                                                                    2 434 622      2 077 824        230 528   
Interest paid                                                                      (9 998 566)   (23 962 072)      (946 740)   
Taxation paid                                                                      (3 366 798)    (7 855 733)      (318 794)   
Net cash generated from operating activities                                       105 875 969     28 269 852     10 025 134   
Cash flows from investing activities                                                                                           
Investment in financial assets                                                               -    (7 277 877)              -   
Purchase of property, plant and equipment                                         (29 680 749)   (35 243 543)    (2 810 396)   
Proceeds from the disposal of property, plant                                                                                  
and equipment                                                                        2 607 744        540 000        246 922   
Movement in non-interest bearing receivables                                                 -      (113 372)              -   
Net cash utilized in investing activities                                         (27 073 005)   (42 094 792)    (2 563 474)   
Cash flows from financing activities                                                                                           
Drawdowns from the revolving credit facility                                                 -     21 500 000              -   
Repayment of borrowings                                                           (95 000 000)              -    (8 995 316)   
Net cash (utilized in)/generated from financing activities                        (95 000 000)     21 500 000    (8 995 316)   
Net (decrease)/increase in cash and cash equivalents                              (16 197 036)      7 675 060    (1 533 657)   
Cash at the beginning of the year                                                   21 428 994     13 753 934      2 029 059   
Cash and cash equivalents at the end of the year                                     5 231 958     21 428 994        495 402   

Non-cash investing and financing transactions                                                                                  
Common shares issued to STA                                                  19      6 908 433      6 515 420        654 142   
Total                                                                                6 908 433      6 515 420        654 142   

The accompanying notes are an integral part of the consolidated financial statements.

1       NATURE OF OPERATIONS

Buffalo Coal Corp. (individually, or collectively with its subsidiaries, as applicable, the "Company", "BC Corp" or the
"Group") is a coal mining company incorporated in Ontario, Canada. The Company is primarily listed on the TSX
Venture Exchange ("TSXV") and has a secondary listing on the Alternative Exchange ("AltX") operated by the JSE
Limited ("JSE"). As at financial year end December 31, 2018, Resource Capital Fund V L.P. ("RCF") owned 347 945 097
common shares of the Company ("Common Shares") representing approximately 82.6% of the then issued and
outstanding Common Shares. The registered office of the Company is Brookfield Place, Bay/Wellington Tower, 181
Bay Street, Suite 2100, Toronto, Ontario M5J 2T3. The head office of the Company is located at Manhattan Office
Park, Building 1, 1st Floor, 16 Pieter St, Centurion, South Africa, 0157. These consolidated financial statements were
approved and authorized for issue by the Board of Directors on April 24, 2019.

The Company owns a 100% interest in Buffalo Coal Dundee Proprietary Limited ("BC Dundee"), a South African
company with an interest in two coal mines in South Africa, namely the Aviemore anthracite mine ("Aviemore"), an
underground mining operation, and the Magdalena bituminous mine ("Magdalena"), an underground mining
operation that has ceased mining activities on October 31, 2018. BC Dundee holds a 70% interest in Zinoju Coal
Proprietary Limited ("Zinoju") (collectively "BC Dundee Group") which holds all the mineral rights relating to the
mining properties. The remaining 30% interest in Zinoju is held by South African Black Economic Empowerment
("BEE") partners. BEE is a statutory initiative on behalf of the South African government, enacted to increase access
by historically disadvantaged South Africans ("HDSA") to the South African economy by increasing HDSA ownership
in South African enterprises.

The business of mining and exploring for minerals involves a high degree of risk and there can be no assurance that
current operations will result in profitable mining operations. The recoverability of the carrying value of property,
plant and equipment and the Company's continued existence is dependent upon the preservation of its interests in
the underlying properties, the discovery of economically recoverable reserves, the achievement of profitable
operations, ability to transport and sell its coal, or the ability of the Company to raise additional financing, if
necessary, or alternatively upon the Company's ability to dispose of its interests on an advantageous basis. Changes
in future conditions could require material write-downs to the carrying values. The Company's assets may also be
subject to increases in taxes and royalties, renegotiation of contracts, currency exchange fluctuations and
restrictions, and political uncertainty.

Although the Company has taken steps to verify title to the properties on which it is conducting its exploration,
development and mining activities, these procedures do not guarantee the Company's title. Property title may be
subject to government licensing requirements or regulations, unregistered prior agreements, unregistered claims,
land claims and non-compliance with regulatory and environmental requirements.

2       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1     Basis of preparation and going concern

These annual consolidated financial statements of the Group were prepared in accordance with International
Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB") and have
been prepared in accordance with accounting policies based on the IFRS standards and International Financial
Reporting Interpretations Committee ("IFRIC") interpretations. The policies set out below were consistently applied
to all the years presented unless otherwise noted below.

The annual consolidated financial statements have been prepared under the historical cost convention, as modified
by financial assets at fair value through profit or loss and compound financial instruments.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgment in the process of applying the accounting policies of
the Group. The areas involving a higher degree of judgment or complexity, or areas where assumptions and
estimates are significant to the consolidated financial statements are disclosed in Note 4.

The consolidated financial statements have been prepared on the basis of accounting principles applicable to a going
concern, which assume that the Group 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.

In prior years, in response to conditions at the time, the Group implemented various restructurings at BC Dundee
including two retrenchment processes and concluded agreements with STA Coal Mining Company Proprietary
Limited ("STA"). The agreements with STA included the provision of contract mining services by STA at Magdalena
("STA Contract Mining Agreement"), the sale of certain underground mining equipment to STA and, in order to
alleviate cash flow pressures, an equity settlement arrangement ("STA Equity Settlement Agreement") in terms of
which a portion of the contract mining fees were settled through the issuance of common shares of the Company
("Common Shares").

On August 31, 2018, the Company embarked on a Section 189 process following STA's notification to the Company of
its intention not to renew their mining contract at the Magdalena mine at the end of October 2018.

In terms of the Labour Relations Act ("LRA"), a Section 189 process relates to the dismissal of employees based on
operational reasons and prescribes a very clear procedure to be followed in the event of such retrenchments. The
LRA obligates the employer to consult both the affected employee(s) and/or union on the envisioned
retrenchments. The purpose of this consultation is that the parties must engage in a "meaningful joint consensus-
seeking process" and attempt to reach an agreement on possible ways to avoid or postpone the impending
retrenchments.

On October 29, 2018, the mine and STA concluded the Section 189 process with the signing of a retrenchment
agreement by all parties/unions involved, setting out the retrenchment of 152 BC Dundee employees.

The Magdalena underground mining activities ceased at the end of October 2018. As a result, a total of 152 BC
Dundee employees were retrenched (125 employees on November 1, 2018 and 27 employees by the end of
February 2019) (Refer to Note 5).

As of November 2018, following the closure of the Magdalena underground mine, the business case and future cash
flows of BC Dundee rely primarily on the production from the Aviemore anthracite mine. The coal resources
accessible from the current adit at Aviemore are expected to be exhausted in the year 2021. A new adit is required in
order to access the remaining coal reserves and extend the life of the mine. The Company currently does not have
the funding to build this additional adit.

The Group's ability to continue as a going concern and ultimately continue long term operations, is dependent on its
ability to realize on the identified short-term opportunities and to secure the funding required for its medium to
longer term projects. Early in 2018, BC Corp appointed a financial advisor, Northcott Capital Limited ("Northcott") to
undertake a strategic review process to obtain funding for the Company's capital requirements.

However, uncertainty surrounding the STA Contract Mining Agreement and future of the Magdalena mine resulted
in a suspension of the Northcott process in September 2018 in order to allow for the conclusion of the Section 189
process and the closure of the Magdalena mine.

In October 2018, the Board formed a Special Committee to monitor developments and undertake a further strategic
review of the Company and its capital structure in order to review further strategic alternatives that may be in the
interests of Buffalo Coal and its stakeholders following the conclusion of the Section 189 process at Magdalena Mine.

The Group continues to be in breach of certain covenants with respect to its borrowings from Investec at December
31, 2018. As at December 31, 2018, the Investec loan balance amounted to R101.0 million (December 31, 2017:
R188.0 million). The Company negotiated further amendments to the repayment terms of the outstanding term loan
(R25.5 million) and revolving credit agreement (R79.8 million) with Investec subsequent to year end (Refer to Note
30, Subsequent events). Pursuant to the amended Investec term loan and revolving credit facility agreement dated
March 05, 2019, Investec agreed not to exercise its acceleration rights with respect to any existing events of default
under the Investec Facility until June 30, 2019.

The RCF loan of US$27 million is due and payable on June 30, 2019 (Refer to Note 22). As at April 15, 2019, RCF
agreed to extend the maturity date until December 31, 2019 to allow the Company to obtain financing in order to
settle this amount as it currently does not expect to have the means to repay this amount in full on the June due
date.

It is uncertain at this point in time what the outcome of the above-mentioned bidding process will be and if the
Company will be able to obtain financing to settle its debt obligations.

Although the Group has, over time, implemented various restructuring initiatives, the Group continues to experience
operational challenges. The Group remains dependent upon sustaining profitable levels of operation, as well as the
continued support of Investec, RCF and other stakeholders and believes that subject to its ability to meet current
production and sales forecasts, it should be able to generate positive cash flows in the foreseeable future.

There is no assurance that the Company will be able to meet its covenants in the future, or that Investec will provide
future waivers or that RCF will provide further extensions, if required. These matters constitute material
uncertainties which cast significant doubt as to whether the Group can continue as a going concern.

As at December 31, 2018, the Company had a shareholders' deficiency of R402.5 million (December 31, 2017: R337.8
million), and a working capital deficiency of R490.5 million (December 31, 2017: R169.4 million). The Company
recorded a net loss of R68.4 million for the year ended December 31, 2018 (R123.7 million for the year ended
December 31, 2017).

Should the going concern assumption not be appropriate for these annual consolidated financial statements, then
adjustments would be necessary to the carrying values of assets and liabilities, the reported revenues and expenses,
and the statement of financial position classifications. Such adjustments could be material.

References to "R", "Rands" mean South African Rands, "C$" mean Canadian Dollars and "US$" mean United States
Dollars.

Convenience rate translation

The Company's functional and presentation currency is Rands. The Canadian Dollar amounts provided in the
financial statements represent supplementary information solely for the convenience of the reader. The financial
position as of December 31, 2018 and the financial results for the year ended December 31, 2018 were translated
into Canadian Dollars using a convenience translation at the rate of C$1:R10.56105, which is the exchange rate
published on Oanda.com as of December 31, 2018. Such presentation is not in accordance with IFRS and should not
be construed as a representation that the Rand amounts shown could be readily converted, realized or settled in
Canadian Dollars at this or at any other rate.

2.2     New standards, amendments and interpretations

The following standards, amendments and interpretations are issued and effective for the first time for the
December 31, 2018 financial year-end:

Effective January 1, 2018, the Group adopted IFRS 9, Financial Instruments, and IFRS 15, Revenue from Contracts
with Customers, which resulted in changes in accounting policies as described below. In accordance with the
transitional provisions in both standards, the Company adopted these standards retrospectively without restating
comparatives, with the cumulative impact adjusted in the opening balances as at January 1, 2018. There were no
effects on opening balances at January 1, 2018 with respect to the adoption of these policies.

IFRS 9 - 'Financial Instruments' - effective January 1, 2018

IFRS 9 replaces International Accounting Standard ("IAS") 39, Financial Instruments: Recognition and Measurement.
IFRS 9 introduces new requirements for the classification, measurement and impairment of financial assets and
hedge accounting. It establishes two primary measurement categories for financial assets: (i) amortized cost and (ii)
fair value either through profit or loss ("FVPL") or through other comprehensive income ("FVOCI"); establishes
criteria for the classification of financial assets within each measurement category based on business model and cash
flow characteristics; and eliminates the existing held for trading, held to maturity, available for sale, loans and
receivable and other financial liabilities categories.

IFRS 9 also introduces a new expected credit loss model for the purpose of assessing the impairment of financial
assets and requires that there be a demonstrated economic relationship between the hedged item and hedging
instrument.

The table below illustrates the classification and measurement of financial assets and financial liabilities under IAS 39
and IFRS 9 on January 1, 2018:

                                                   Financial instrument classification
                                       Original classification under IAS                 New classification
                                                       39                                  under IFRS 9
Financial assets
Cash and cash equivalents             Loans and receivables                Financial assets at amortized cost
Restricted cash                       Loans and receivables                Financial assets at amortized cost
Trade and other receivables           Loans and receivables                Financial assets at amortized cost
Non-interest bearing receivables      Loans and receivables                Financial assets at amortized cost
Investments held for trading          Investments held for trading         Financial assets at FVPL
Financial liabilities
Trade and other accrued liabilities   Other financial liabilities          Financial liabilities at amortized cost
Debt                                  Other financial liabilities          Financial liabilities at amortized cost
Conversion option liability           Other financial liabilities          Financial liabilities at FVPL
Warrant liability                     Other financial liabilities          Financial liabilities at FVPL

The Group adopted IFRS 9 retrospectively without restating comparatives and therefore the comparative
information in respect of financial instruments for the year ended December 31, 2017 was accounted for in
accordance with the Company's previous accounting policy under IAS 39.

IFRS 15 - 'Revenue from Contracts with Customers' - effective January 1, 2018

IFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts
with customers. IFRS 15 supersedes the previous revenue recognition guidance including IAS 18, Revenue; IAS 11,
Construction Contracts and the related Interpretations.

The core principle of IFRS 15 is that an entity should recognize revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in
exchange for those goods or services. Under IFRS 15, an entity recognizes revenue when (or as) a performance
obligation is satisfied, i.e. when 'control' of the goods or services underlying the particular performance obligation is
transferred to the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific
scenarios. Furthermore, extensive disclosures are required by IFRS 15.

The new standard requires companies to follow a five-step model to determine if revenue should be recognized:

1. Identify the contracts with customers
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performance obligation
5. Recognize revenue as each performance obligation is satisfied

The Group's revenue recognition was substantially unchanged by the adoption of IFRS 15 and did not result in any
adjustments.

IFRIC 22 - Foreign Currency Transactions and Advance Consideration - effective January 1, 2018

IFRIC 22 was issued in December 2016 and addresses foreign currency transactions or parts of transactions where
there is consideration that is denominated in a foreign currency; a prepaid asset or deferred income liability is
recognized in respect of that consideration, in advance of the recognition of the related asset, expense or income;
and the prepaid asset or deferred income liability is non-monetary. The interpretation committee concluded that
the date of the transaction, for purposes of determining the exchange rate, is the date of initial recognition of the
non-monetary prepaid asset or deferred income liability. The application of IFRIC 22 did not have a significant impact
on the Group's consolidated financial statements.

IFRS 2 - Share-based payments - effective January 1, 2018

This amendment clarifies the measurement basis for cash-settled, share-based payments and the accounting for
modifications that change an award from cash-settled to equity-settled. It also introduces an exception to the
principles in IFRS 2 that will require an award to be treated as if it was wholly equity-settled, where an employer is
obliged to withhold an amount for the employee's tax obligation associated with a share-based payment and pay
that amount to the tax authority. The application of IFRS2 did not have a significant impact on the Group's
consolidated financial statements.

The following standards, amendments and interpretations are issued but not yet effective for the December 31,
2018 financial year-end:

IFRS 16 - 'Leases' - effective January 1, 2019

IFRS 16 introduces a comprehensive model for the identification of lease arrangements and accounting treatments
for both lessors and lessees. It will supersede the current lease guidance including IAS 17 Leases and the related
interpretations when it becomes effective.

IFRS 16 distinguishes leases and service contracts on the basis of whether an identified asset is controlled by a
customer. Distinctions of operating leases (off balance sheet) and finance leases (on balance sheet) are removed for
lessee accounting and is replaced by a model where a right-of-use asset and a corresponding liability have to be
recognized for all leases by lessees except for short-term lessees and leases of low value assets.

The right-of-use asset is initially measured at cost and subsequently measured at cost less accumulated depreciation
and impairment losses, adjusted for any remeasurement of the lease liability. The lease liability is initially measured
at the present value of the lease payments. Subsequently, the lease liability is adjusted for interest and lease
payments, as well as the impact of lease modifications, amongst others. Furthermore, the classification of cash flows
will also be affected as operating lease payments under IAS 17 are presented as operating cash flows; whereas under
the IFRS 16 model, the lease payments will be split into a principal and interest portion which will be presented as
financing and operating cash flows respectively.

Management is currently assessing the potential impact of the application of IFRS 16 on the financial statements by
conducting a detailed review.

IFRIC 23 - Uncertainty over Income Tax Treatments - effective January 1, 2019

IFRIC 23 provides a framework to consider, recognize and measure the accounting impact of tax uncertainties. The
Interpretation provides specific guidance in several areas where previously IAS 12 was silent. The Interpretation also
explains when to reconsider the accounting for a tax uncertainty. Most entities will have developed a model to
account for tax uncertainties in the absence of specific guidance in IAS 12. These models might, in some
circumstances, be inconsistent with IFRIC 23 and the impact on tax accounting could be material. Management
should assess the existing models against the specific guidance in the Interpretation and consider the impact on
income tax accounting.

The Group does not anticipate, given its current tax status, that the application of IFRIC 23 will have a significant
impact on the Group's consolidated financial statements.

2.3     Consolidation

The annual consolidated financial statements comprise the financial statements of the Company and its subsidiaries,
BC Dundee, Zinoju and Buffalo Coal Proprietary Limited ("BC").

(a)     Subsidiaries

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases. The Company reassesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or more of the three elements of control.

The Group applies the acquisition method to account for business combinations. The consideration transferred for
the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners
of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of
any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date.

The Group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share of the recognized amounts of the acquiree's
identifiable net assets. If the business combination is achieved in stages, the acquisition date fair value of the
acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through
profit or loss. Any contingent consideration to be transferred by the Group is recognized at fair value at the
acquisition date.

Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is
recognized in accordance with IFRS 9 either in profit or loss or as a change to OCI.

Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted
for within equity.

The excess of the consideration transferred, in respect of the amount of any non-controlling interest in the acquiree
and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the
identifiable net assets acquired is recorded as goodwill. If the total consideration transferred, non-controlling
interest recognized and previously held interest measured is less than the fair value of the net assets of the
subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in profit or loss.

Inter-company transactions, balances, income and expenses on transactions between Group companies are
eliminated. Profits or losses resulting from inter-company transactions that are recognized in assets are also
eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Group. Acquisition-related costs are expensed as incurred.

(b)     Transactions with non-controlling interests

The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For
purchases from non-controlling interests, the difference between any consideration paid and the relevant share
acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to
non-controlling interests are also recorded in equity.

When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to
its fair value, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying
amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or
financial asset. In addition, any amounts previously recognized in OCI in respect of that entity are accounted for as if
the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously
recognized in OCI are reclassified to profit or loss. If the ownership interest in an associate is reduced but significant
influence is retained, only a proportionate share of the amounts previously recognized in OCI is reclassified to profit
or loss where appropriate.

2.4     Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker, who is responsible for allocating resources and assessing the performance of the operating
segments. The chief operating decision-maker has been identified as the Board of Directors.

2.5     Foreign currency translation

(a)     Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the
primary economic environment in which the entity operates. The consolidated financial statements are presented in
Rands, which is the Group's presentation currency and the Company's functional currency. The functional currency
of the Company's subsidiaries, namely BC Dundee, Zinoju, and BC, is South African Rands.

(b)     Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognized in profit or loss. Foreign exchange gains and losses
are presented in profit or loss within "other income/(expense) - net".

2.6     Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and accumulated
impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the
item can be measured reliably. All other repairs and maintenance costs are charged to profit or loss during the
financial period in which they are incurred.

Land is not depreciated. Depreciation of mineral rights is calculated using the units-of-production ("UOP") method
based on total run of mine tonnes of coal expected to be mined per the LOM plan. Depreciation on the remaining
assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values
over their estimated useful lives, as follows:

       Buildings                                                        10 to 20 years
       Development costs                                                5 to 20 years
       Mining assets                                                    5 to 25 years
       Office equipment and fixtures and fittings                       3 to 10 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial
position date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's
carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in
profit or loss.

Mineral rights

Mineral rights are recorded at cost. This includes costs incurred to explore, sample, drill and perform feasibility tests
when incurred before the research proves the land to be technically feasible and commercially viable, at which point
the costs are reclassified as mining assets within property, plant and equipment. Exploration and evaluation costs
incurred before mineral rights are acquired are expensed in profit or loss. Depreciation of mineral rights is calculated
using the UOP method.

2.7     Leased assets

Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of
ownership are classified as finance leases. Finance leases are capitalized at the lower of the fair value of the leased
property or the estimated present value of the underlying lease payment. Each lease payment is allocated between
the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The
corresponding rental obligations, net of finance charges, are included in interest bearing borrowings. The interest
element of the finance charges is charged to the profit or loss over the lease period. Property, plant and equipment
acquired under finance leasing contracts are depreciated over the useful lives of the assets. Leases in which a
significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.
Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss
on a straight-line basis over the period of the lease.

2.8     Impairment of non-financial assets

At least annually, or when events and circumstances warrant a review, the Group reviews the carrying amounts of its
non-financial assets to determine whether there is any indication that those assets have suffered an impairment
loss. The carrying value of an asset is considered to be impaired when the recoverable amount of such an asset is
less than its carrying value. In this instance, a loss is recognized based on the amount by which the carrying value
exceeds the recoverable amount.

The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets (including goodwill) are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). In assessing value in use, the estimated future cash flows are
discounted to their present value using a discount rate that reflects current market assessments of time value of
money and the risks specific to the asset.

Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm's length transaction between
knowledgeable willing parties, less the costs of disposal.

When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognized for the asset (cash-generating unit) in
prior years. A reversal of an impairment loss is recognized immediately in profit or loss, unless it relates to goodwill,
in which case it is not reversed.

2.9     Non-current assets held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered
principally through a sale transaction rather than through continuing use. This condition is regarded as met only
when the asset is available for immediate sale in its present condition subject only to terms that are usual and
customary for sales of such asset and its sale is highly probable. Management must be committed to the sale, which
should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less
costs to sell.

2.10    Financial instruments

2.10.1 Financial assets

The Group classifies its financial assets in the following categories: at FVPL and as financial assets at amortized cost.
The classification depends on the purpose for which the financial assets were acquired. Management determines the
classification of its financial assets at initial recognition.

(a)     Financial assets at FVPL

Financial assets at FVPL are classified in this category if acquired principally for the purpose of selling in the short-
term. Derivatives are also categorized as such unless they are designated as hedges. Assets in this category are
classified as current assets if expected to be settled within twelve months, otherwise they are classified as non-
current.

The Group's financial assets at FVPL comprise of cash equivalents and other long-term investments which are
included in 'investment in financial assets' in the statement of financial position.

(b)     Financial assets at amortized cost

Financial assets at amortized cost are non-derivative financial assets that are held in order to collect contractual cash
flows. The contractual terms of financial assets at amortized cost, give rise to cash flows on specified dates that are
solely payments of principal and interest on the principal amount outstanding.

They are included in current assets, except for those with maturities greater than twelve months after the statement
of financial position date, which are classified as non-current assets. The Group's financial assets at amortized cost
comprise of trade and other receivables, cash, long-term restricted cash and long-term receivables, and interest and
non-interest-bearing receivables in the statement of financial position.

(c)     Recognition and measurement

Regular purchases and sales of financial assets are recognized on the trade-date, being the date on which the Group
commits to purchase or sell the asset. Financial assets carried at FVPL are initially recognized at fair value, and
transaction costs are expensed in profit or loss. Financial assets at amortized cost are initially carried at fair value and
subsequently at amortized cost using the effective interest rate method.

Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have
been transferred and the Group has transferred substantially all risks and rewards of ownership. Gains or losses
arising from changes in the fair value of the financial assets at FVPL are presented in profit or loss within 'other
income/(expense) - net'.

(d)     Impairment

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are
considered to be impaired when there is objective evidence that, as a result of one or more events that occurred
after the initial recognition of the financial asset, the estimated future cash flows of the financial asset have been
affected.

For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference
between the asset's carrying amount and the present value of estimated future cash flows, discounted at the
financial asset's original effective interest rate. The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets with the exception of trade receivables (Refer to Note 2.12).

(e)     Derecognition

The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
party.

2.10.2 Financial liabilities

Financial liabilities are classified as financial liabilities at amortized cost and include borrowings, RCF loan facilities,
loans payable and trade and other payables. Other financial liabilities are subsequently measured at amortized cost
using the effective interest rate method.

The Group derecognizes financial liabilities when the Group's obligations are discharged, cancelled or they expire.
The difference between the carrying amount of the financial liability derecognized and the consideration paid and
payable is recognized in profit or loss.

2.10.3 Compound financial instruments

Compound financial instruments issued by the Group comprise convertible loans that can be converted to share
capital at the option of the holder. The instrument is classified separately as a financial liability and equity in
accordance with the substance of the contractual arrangements and the definitions of a financial liability and an
equity instrument.

At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for
similar non-convertible instruments. This amount is recorded as a liability on an amortized cost basis using the
effective interest method until extinguished upon conversion or at the instrument's maturity date.

The conversion option classified as equity is determined by deducting the amount of the liability component from
the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax
effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in
equity until the conversion option is exercised, in which case, the balance recognized in equity will be transferred to
issued capital. When the conversion option remains unexercised at the maturity date of the convertible note, the
balance recognized in equity will be transferred to retained earnings/loss.

No gain or loss is recognized in profit or loss upon conversion or expiration of the conversion option.

Foreign-currency-denominated convertible loans that will be settled by the Company delivering a variable number of
its shares for a fixed amount of foreign currency will be classified as a financial liability. The conversion option is an
embedded derivative, which is separated as it is not closely related to the debt host. Changes in the fair value of the
embedded derivative liability will be recorded in profit or loss.

Transaction costs that relate to the issue of the convertible loans are allocated to the liability and equity components
in proportion to the allocation of the gross proceeds. Transactions costs relating to the equity component are
recognized directly in equity. Except for a derivative liability, transaction costs relating to the liability component are
included in the carrying amount of the liability component and are amortized over the lives of the convertible loans
using the effective interest rate method.

2.10.4 Derivative financial instruments

Derivatives are initially recognized at fair value on the date the derivative contract is entered into and are
subsequently remeasured at FVPL. The method of recognizing the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument. The Group's derivative instruments are not designated as hedging
instruments and do not qualify for hedge accounting. Accordingly, changes in the fair value of the derivative
instruments are recognized immediately in profit or loss within 'other income/(expense) - net'.

The Group's derivative financial instruments comprise of the Investec warrant liability and the RCF conversion option
liability which are included in "current liabilities" in the statement of financial position.

2.11    Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the
extent that it relates to items recognized directly in equity. In this case, the tax is recognized directly in equity.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
statement of financial position date in the countries where the Company and its subsidiaries operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.

Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred
tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not
accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the
statement of financial position date and are expected to apply when the related deferred income tax asset is realized
or the deferred income tax liability is settled. Deferred income tax assets are recognized only to the extent that it is
probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except for deferred
income tax liabilities where the timing of the reversal of the temporary difference is controlled by the Group and it is
probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.

2.12    Trade and other receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the
effective interest rate method, less provision for impairment. A provision for impairment of trade receivables is
established when there is objective evidence that the Group will not be able to collect all amounts due according to
the original terms of the receivables and is recognized in profit or loss within 'operating expenses'. Significant
financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and
default or delinquency in payments are considered indicators that the trade receivable is impaired. When a trade
receivable is uncollectible, it is written off against the provision. Subsequent recoveries of amounts previously
written off are credited against 'operating expenses' in profit or loss.

2.13    Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first in, first out ("FIFO")
method. The cost of finished goods and work in progress comprises operating costs which are absorbed into stock on
hand, based on the level of extraction during the period in which such stock was mined and the costs incurred during
such period. Overheads are allocated on the same basis. Inventories exclude borrowing costs. Net realizable value is
the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.14    Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the statement of financial position.

2.15    Share-based payments

The Group operates an equity-settled, share-based compensation plan, under which the entity receives services
from employees and consultants as consideration for equity instruments (options) of the Group. The fair value of the
employee and consulting services received in exchange for the grant of the options is recognized as an expense. The
total amount to be expensed is determined by reference to the fair value of the options granted and is recognized
within profit or loss. At the end of each reporting period, the Group revises its estimates of the number of options
that are expected to vest based on the non-market vesting conditions. It recognizes the impact of the revision in the
income statement, with a corresponding adjustment to equity.

For those options which vest immediately and are subsequently cancelled, the adjustments are made directly in
equity between the reserves and retained loss.

The fair value of common shares issued as compensation is based on the quoted market price.

The fair value of stock options and compensation warrants is determined using the Black-Scholes option-pricing
model. The compensation expense is recognized over the vesting period. At the end of each reporting period, the
Group revises its estimates of the number of options that are expected to vest based on the vesting conditions.

The Group recognizes the impact of the revision to original estimates in profit or loss, with a corresponding
adjustment to equity.

When the options and warrants are exercised, the Company issues new shares. The proceeds received, net of any
directly attributable transaction costs, together with any related amount in reserves, are credited to share capital.

2.16    Trade and other payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Trade and other payables are classified as financial liabilities at amortized cost if payment is
due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as
non-current liabilities. Trade payables are recognized initially at fair value and subsequently measured at amortized
cost using the effective interest rate method.

2.17    Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it
is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably
estimated. Provisions are not recognized for future operating losses.

The Group's provision for asset retirement obligations ("ARO") is measured at the present value of the amount
expected to be required to settle the obligation using a risk-free rate that reflects the rate of interest on monetary
assets that are essentially free of default risk, adjusted for the effect of any entity's credit standing. Future costs to
retire an asset, including dismantling, remediation and ongoing treatment and monitoring of the site, are recognized
and recorded as a provision for close down rehabilitation costs at fair value in the accounting period in which the
legal obligation arising from the disturbance occurs. The liability is accreted over time through periodic charges to
operations.

The fair value of the costs is capitalized as part of the assets' carrying value and amortized over the assets' estimated
useful lives.

A restructuring provision is recognized when the Group has developed a detailed formal plan for the restructuring
and has raised a valid expectation in those affected that it will carry out a restructuring by starting to implement the
plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes
only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily
entailed by the restructuring and not associated with ongoing activities of the entity.

2.18    Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of coal in the ordinary
course of the Group's activities. Revenue is shown net of value-added tax, returns, rebates and discounts.

The Group recognizes revenue based on the five-step model outlined in IFRS 15, when control has been transferred
to the customer and the performance obligations are satisfied.

(a)     Sale of coal

The Group extracts, washes and sells coal. Sales are recognized when the entity has delivered products to the
customer as outlined in the sales contract, the customer has full discretion over the products, and there is no
unfulfilled obligation that could affect the customer's acceptance of the products. Delivery does not occur until the
products have either been shipped (for certain foreign sales), or the date upon which the goods are dispatched to
the customer, the risks of obsolescence and loss have been transferred to the customer, and either the customer has
accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for
acceptance have been satisfied.

(b)     Interest income

Interest income is recognized on a time-proportion basis using the effective interest rate method. When a receivable
is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow
discounted at the original effective interest rate of the instrument and continues unwinding the discount as interest
income. Interest income on impaired loans is recognized using the original effective interest rate.

(c)     Other income

Other income is recognized on an accrual basis and comprises primarily foreign exchange gains and losses, profit on
sale of assets and scrap sales.

2.19    Employee benefits

(a)     Defined contribution plans

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity.
The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient
assets to pay all employees the benefits relating to employee service in the current and prior periods. The
contributions are recognized as an employee benefit expense when they are due. Prepaid contributions are
recognized as an asset to the extent that a cash refund or a reduction in future payments is available.

(b)     Short-term employee benefits

The cost of short-term employee benefits (those payable within twelve months after the service is rendered), such as
paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical, are recognized in the
period in which the service is rendered and are not discounted.

2.20    Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently
stated at amortized cost using the effective interest rate method, and any difference between proceeds (net of
transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings.

Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down
occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the
fee is capitalized as a pre-payment for liquidity services and amortized over the period of the facility to which it
relates.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least 12 months after the statement of financial position date.

2.21    Loss per share

Basic loss per common share has been computed by dividing the loss applicable to common shareholders by the
weighted average number of common shares outstanding during the representative period. Diluted loss per
common share is determined under the assumption that deemed proceeds on the exercise of stock options and
other dilutive instruments are considered to be used to reacquire common shares at the average price for the period
with the incremental number of shares being included in the denominator of the diluted loss per share calculation.
The diluted loss per share calculation excludes any potential conversion of options and warrants that would decrease
loss per share. During the years ended December 31, 2018 and December 31, 2017, outstanding options and
warrants, as well as the potential shares issuable with regards to the RCF Convertible Loan (Refer to Note 22) were
excluded from the diluted loss per share calculation as they were anti-dilutive.

Headline (loss) per share is a basis for measuring loss per share which accounts for all the profits and losses from
operational, trading, and interest activities that have been discontinued or acquired at any point during the year.
Excluded from this figure are profits or losses associated with the sale or termination of discontinued operations,
fixed assets or related businesses, or from any permanent devaluation or write-off of their values. For the current
financial year, the Company's headline loss per share was adjusted for the profit on sale of property, plant and
equipment of R2.4 million (year ended December 31, 2017: profit of R0.5 million).

3       FINANCIAL RISK MANAGEMENT

3.1     Financial risk factors

The Group's activities expose it to a variety of financial risks such as foreign exchange risk, price risk, cash flow
interest rate risk, credit risk and liquidity risk. The Group's overall risk management program focuses on the
unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial
performance.

Risk management is carried out by head office management under policies approved by the Board of Directors. The
Group identifies, evaluates and manages financial risks in close co-operation with the Group's subsidiaries.

3.2     Market risk

(a)     Foreign exchange risk

The Company's functional currency is the Rand. The Group operates internationally and is exposed to foreign
exchange risk arising from currency exposures with respect to the US Dollar and Canadian Dollar.

The Group's foreign exchange risk arises primarily from the sale of coal, based on the API 4 coal price index in US
Dollars to foreign customers, external loans denominated in US Dollars and translation differences arising from the
translation of share capital and other equity items.

At December 31, 2018, a 10% increase/(decrease) in the year average foreign exchange rate between the Canadian
Dollar and the Rand would have increased/(decreased) the Group's profit or loss by approximately R2.3 million (year
ended December 31, 2017: R0.4 million).

A 10% increase/(decrease) in the year end foreign exchange rate between the US Dollar and the Rand would have
increased/(decreased) the Group's profit or loss by approximately R38.6 million (year ended December 31, 2017:
R33.2 million).

(b)     Price risk

The Group is exposed to commodity price risk, primarily due to fluctuations in the API 4 coal price index, by which
foreign coal sales are priced. Commodity prices fluctuate on a daily basis and are affected by numerous factors
beyond the Group's control. The supply and demand for commodities, the level of interest rates, the rate of
inflation, investment decisions by large holders of commodities including governmental reserves and stability of
exchange rates can all cause significant fluctuations in commodity prices. Such external economic factors are in turn
influenced by changes in international investment patterns and monetary systems and political developments.

At December 31, 2018, a 10% change in the API 4 coal price index would have resulted in a corresponding change in
export coal revenue of approximately R3.6 million (year ended December 31, 2017: R3.1 million).

(c)     Cash flow interest rate risk

The Group's interest rate risk arises from deposits held with banks and interest-bearing liabilities. Borrowings issued
at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash held at variable
rates. During the current and prior financial year, the Group's borrowings at variable rates were denominated in
South African Rands.

Based on the simulations performed, the impact on profit or loss of a 1% shift of interest rates on borrowings would
be a maximum increase/(decrease) in profit or loss of R0.8 million (year ended December 31, 2017: R1.6 million).

3.3     Credit risk

Credit risk is managed at a Group level, except in respect of trade receivables which are managed at an operational
level.

Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit
exposures to customers, including outstanding receivables and committed transactions (Refer to Notes 13 and 29,
respectively). The Group has banking relationships, and places deposits, only with high quality financial institutions.

Risk control assesses the credit quality of customers, taking into account their financial position, past experience and

other factors. The utilization of credit limits is regularly monitored. No credit limits were exceeded during the
reporting period, and management does not expect any losses from non-performance by these counterparties.

Restricted cash totaling R11.2 million was on deposit with First National Bank ("FNB") to be released to the relevant
counterparties if payments are not made to them (Refer to Note 17).

3.4    Liquidity risk

Cash flow forecasting is performed by Group finance. Group finance monitors rolling forecasts of the Group's
liquidity requirements to ensure it has sufficient cash to meet operational needs. Such forecasting takes into
consideration the Group's debt/equity financing plans, covenant compliance and external legal requirements.

Below is an analysis of the Group's non-derivative financial liabilities disclosed in maturity groupings based on the
remaining period at the statement of financial position date to the contractual maturity date. The amounts disclosed
in the table are the contractual undiscounted cash flows.

                                                                                            Between 1 and 5   Greater than 5   
                                                                    Not later than 1 year             years            years   
                                                                                        R                 R                R   
At December 31, 2018                                                                                                           
Borrowings                                                                    105 327 746                 -                -   
RCF loan facilities                                                           388 691 406                                  -   
Trade and other payables                                                       95 352 468                 -                -   
At December 31, 2017                                                                                                           
Borrowings                                                                    200 345 633                 -                -   
RCF loan facilities                                                                     -       333 961 380                -   
Trade and other payables                                                      156 497 655                 -                -   

3.5     Capital risk management

The Group's objective when managing capital is to safeguard the Group's ability to continue as a going concern in
order to provide returns for shareholders and benefits for other stakeholders. In order to maintain or adjust the
capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is
calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-
current borrowings as shown in the consolidated statements of financial position) less cash and cash equivalents.
Total capital is calculated as "equity" as shown in the consolidated statements of financial position plus net debt.

The gearing ratios at December 31, 2018 and December 31, 2017 were as follows:

                                                                                    December 31, 2018      December 31, 2017   
                                                                                                    R                      R   
Total borrowings                                                                          485 210 748            502 776 300   
Less: cash and cash equivalents                                                           (5 231 958)           (21 428 994)   
Net debt                                                                                  479 978 790            481 347 306   
Total equity                                                                            (402 474 919)          (337 765 527)   
Total capital                                                                              77 503 871            143 581 779   
Gearing ratio (net debt/total capital)                                                           619%                   335%    

Included within total borrowings is a convertible loan of R381.1 million (December 31, 2017: R334.0 million).

The Company's capital management objectives, policies and processes have remained unchanged during the year
ended December 31, 2018 except for the Investec loan (Refer to Notes 21 and 30) and the RCF loan facilities (Refer
to Note 22).

The Company is not subject to any externally imposed capital requirements with the exceptions as discussed in
Notes 21 and 22, and the capital requirements of the TSXV which requires adequate working capital or financial
resources of the greater of (i) C$50 000 and (ii) an amount required in order to maintain operations and cover
general and administrative expenses for a period of 6 months.

As of December 31, 2018, the Company may not be compliant with the policies of the TSXV. The impact of any
violation is not known and is ultimately dependent on the discretion of the TSXV.

3.6   Fair value estimation

Financial instruments carried at fair value are assigned to different levels of the fair value hierarchy, by valuation
method. The different levels have been defined as follows:

-     Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
-     Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
      directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
-     Inputs for the asset or liability that are not based on observable market data (that is unobservable inputs)
      (level 3).

The following table presents the group's financial assets and liabilities that are measured at fair value at December
31, 2018 and December 31, 2017:

                                                                                 Level 1               Level 2       Level 3   
                                                                                       R                     R             R   
December 31, 2018                                                                                                              
Investment in financial assets                                                   194 484                     -             -   
Other receivable - restricted                                                          -            54 901 857             -   
Conversion option liability                                                            -             3 132 577             -   
Warrant liability                                                                      -                 7 825             -   
December 31, 2017                                                                                                              
Investment in financial assets                                                   181 465                     -             -   
Other receivable - restricted                                                                       53 211 988                 
Conversion option liability                                                            -                28 289             -   
Warrant liability                                                                      -                29 507             -  

4      CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of the consolidated financial statements in conformity with IFRS requires the Group's management
to make judgments, estimates and assumptions about future events that affect the amounts reported in the
consolidated financial statements and related notes thereto. Although these estimates are based on management's
best knowledge of the amounts, events or actions, actual results may differ from those estimates and these
differences could be material. The areas which require management to make significant judgments, estimates and
assumptions in determining the carrying values and amounts include, but are not limited to:

4.1     Provisions

Significant judgment and use of assumptions are required in determining the Group's provisions. Management uses
its best estimates based on current knowledge in determining the amount to be recognized as a provision. Key
assumptions utilized in the determination of the rehabilitation provision, which is measured at fair value, include the
estimated life of mine, estimates of reserves and discount rates. Fair value is determined based on the net present
value of estimated future cash expenditures for the settlement of the liability that may occur upon decommissioning
of the mine. Such estimates are subject to change based on changes in laws and regulations and negotiations with
regulatory authorities.

4.2     Property, plant and equipment, mineral rights and other intangible assets

The Group makes use of experience and assumptions in determining the useful lives and residual values of property,
plant and equipment, mineral rights and other intangible assets (other than goodwill). Management reviews
annually whether any indications of impairment exist. Information that the Group considers includes changes in the
market, economic and legal environment in which the Group operates as well as internal sources of information.
Estimates include but are not limited to estimates of the discounted future after-tax cash flows expected to be
derived from the Company's mining properties, costs to sell the properties and the appropriate discount rate.
Reductions in coal price forecasts, increases in estimated future costs of production, increases in estimated future
capital costs, depreciation of the Rand relative to the US Dollar, reductions in the amount of recoverable mineral
reserves and mineral resources and/or adverse current economics could result in a write-down of the carrying
amounts of the Group's assets. Should an impairment exist, it is recorded in 'other income/(expense) -net' within
profit or loss.

4.3     Taxes and recoverability of potential deferred tax assets

The Company is subject to income, value added, withholding and other taxes in various jurisdictions. Significant
judgment is required in determining the Company's provisions for taxes. There are many transactions and
calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The
Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be
due. The determination of the Company's income, value added, withholding and other tax liabilities requires
interpretation of complex laws and regulations often involving multiple jurisdictions. The Company's interpretation
of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax
authorities. All tax related filings are subject to government audit and potential reassessment subsequent to the
financial statement reporting period. Where the final tax outcome of these matters is different from the amounts
that were initially recorded, such differences will impact the tax related accruals and deferred income tax provisions
in the period in which such determination is made.

In assessing the probability of realizing deferred tax assets recognized, management makes estimates related to
expectations of future taxable income, applicable tax planning opportunities, expected timing of reversals of existing
temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable
tax authorities. In making its assessments, management gives additional weight to positive and negative evidence
that can be objectively verified. Estimates of future taxable income are based on forecast cash flows from operations
and the application of existing tax laws in South Africa.

4.4     Share-based payments

Management determines costs for share-based payments using market-based valuation techniques. The fair value of
the market-based and performance-based share awards are determined at the date of grant using generally
accepted valuation techniques. Assumptions are made and judgment used in applying valuation techniques. These
assumptions and judgments include estimating the future volatility of the stock price, expected dividend yield, future
employee turnover rates and future employee stock option exercise behaviors and corporate performance. Such
judgments and assumptions are inherently uncertain. Changes in these assumptions could materially affect the fair
value estimates.

4.5     Compound financial instruments

The Group has entered into agreements in the form of foreign-currency-denominated convertible loans and
warrants which are accounted for as compound financial instruments. The fair value of the embedded derivative
liabilities (conversion option liability and warrant liability) are determined at the date of the transaction and are fair
valued at each reporting date through profit or loss using generally accepted valuation techniques. Assumptions are
made and judgments are used in applying valuation techniques.

These assumptions and judgments include estimating the future volatility of the stock price, expected dividend yield
and risk-free rate of return.

Such judgments and assumptions are inherently uncertain. Changes in these assumptions could materially affect the
fair value estimates.

4.6     Mineral reserve estimates

The figures for mineral reserves and mineral resources are determined in accordance with National Instrument 43-
101, "Standards of Disclosure for Mineral Projects", issued by the Canadian Securities Administrators. There are
numerous uncertainties inherent in estimating mineral reserves and mineral resources, including many factors
beyond the Group's control. Such estimation is a subjective process, and the accuracy of any mineral reserve or
mineral resource estimate is a function of the quantity and quality of available data and of the assumptions made
and judgments used in engineering and geological interpretation. Differences between management's assumptions
including economic assumptions such as coal prices, foreign exchange rates and market conditions could have a
material effect on the Group's reserves and resources, and as a result, could also have a material effect on the
Group's financial position and results of operation.

4.7     Going concern assumption

The consolidated financial statements have been prepared on the basis of accounting principles applicable to a going
concern, which assume that the Group 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. Should the going concern assumption
not be appropriate for these consolidated financial statements, then adjustments would be necessary to the carrying
values of assets and liabilities, the reported revenues and expenses, and the statement of financial position
classifications. Such adjustments could be material (Refer to Note 2.1).

4.8     Contingencies

Refer to Note 29.

5   NATURE OF EXPENSES                                                               
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Cost of sales                                                                                                                  
Employee costs                                                                               155 176 941         144 644 296   
Mining and related costs                                                                     221 630 050         285 398 014   
Repairs and maintenance                                                                       61 498 287          48 005 515   
Transport and shipping                                                                        51 417 023          57 803 969   
Raw materials                                                                                 25 609 523          21 506 540   
Depreciation                                                                                  21 872 153          64 379 364   
SLP expense                                                                                   15 012 585           7 541 843   
Training                                                                                       3 290 505           2 157 715   
Royalties DMR                                                                                  3 673 125           4 970 105   
Total cost of sales                                                                          559 180 192         636 407 361   

General and administration expenses                                                                                            
Audit and tax related fees                                                                     4 733 473           2 691 226   
Bad debts                                                                                      3 213 998            (60 524)   
Consulting fees                                                                                9 815 666           6 449 874   
Directors fees                                                                                 2 941 830           2 870 261   
Fund administration fees                                                                       1 260 014           1 260 015   
Insurance                                                                                      6 702 558           9 429 200   
Legal fees                                                                                     2 731 368           2 474 446   
Penalties (DMR)                                                                                2 000 000           2 450 000   
Retrenchment costs                                                                            12 381 650                   -   
Rent paid                                                                                      1 265 679             627 325   
Rehabilitation expenses                                                                          552 642           3 985 358   
Salaries and wages                                                                            38 722 556          32 517 410   
Shareholder communication and listing fees                                                       614 604             595 408   
Travel and accommodation                                                                       3 378 675           2 607 559   
Telephone, internet and computer expenses                                                      3 210 080           2 043 159   
Other                                                                                          3 633 009           2 360 929   
Total general and administration expenses                                                     97 157 802          72 301 646 
  
Total expenses                                                                               656 337 994         708 709 007   

Audit and tax related fees for the year ended December 31, 2018 included C$72 610 (approximately R0.8 million) for
tax related services in Canada (December 31, 2017: RNil).

Consulting fees for the year ended December 31, 2018 included R3.3 million (December 31, 2017: R0.2 million) for
the strategic review process and bankable feasibility study costs related to the new adit at the Aviemore Mine.

As at December 31, 2018 a provision of R12.4 million was recognized for retrenchment costs related to the Section
189 process referred to in Note 2.1, Basis of preparation and going concern.

6   OTHER INCOME/(EXPENSES) - NET                                                                          
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Foreign exchange (loss)/gain - net                                                          (57 403 538)          34 594 328   
Net profit on disposal of property, plant and equipment                                        2 354 879             452 436   
Scrap sales                                                                                    1 140 199             491 958   
Dividends received                                                                               973 606                   -   
Insurance proceeds                                                                                     -              82 035   
Unrealized market-to-market loss on securities                                                         -             104 410   
Fair value adjustment on financial assets                                                      2 949 884           5 634 636   
Fair value adjustment on conversion option and warrant liability                                 934 649          32 027 824   
Penalties provision on witholding tax                                                          (857 002)                   -   
Other income                                                                                   1 473 907           2 599 169   
Total                                                                                       (48 433 416)          75 986 796   

7   IMPAIRMENT LOSS                                                                                                            
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Impairment (loss) on property, plant and equipment                                          (67 490 402)       (175 624 399)   

As noted in Note 2.1, Basis of preparation and going concern, the Company embarked on a Section 189 process on
August 31, 2018 in order to close the Magdalena underground mining operations at the end of October 31, 2018.
The decision to close the mine obliged the Company to perform an impairment assessment with respect to the net
book values of Magdalena's assets during the financial year ended December 31, 2018. In assessing whether
Magdalena's assets had been impaired, the net book value was compared with its recoverable amount. In order to
determine the initial recoverable amount of Magdalena's assets, management reviewed Magdalena's asset register
and identified assets that could be re-purposed elsewhere in the operation and/or disposed of. The remaining assets
were written down to zero. The net book value of assets to be removed from underground, were impaired by 50% to
account for potential wear and tear that may occur during the extraction process. This assessment resulted in an
initial impairment determination of R66.3 million recognized on September 30, 2018. Following the recovery of
assets from underground, a final impairment assessment was done, which resulted in an additional impairment loss
of R1.2 million, recognized on December 31, 2018.

At December 31, 2018, the net book value of Magdalena's assets included in property, plant and equipment was
R85.1 million before recognizing the impairment adjustment of R67.5 million.

The impairment loss of R175.6 million recognized during the year ended December 31, 2017, resulted from a
determination that the carrying value of the Group's property, plant and equipment exceeded their estimated
recoverable amounts as at the year end. At December 31, 2017, management identified indicators of impairment
and determined the recoverable amount of the BC Dundee Group on a value in use basis. The fair value calculations
were determined using pre-tax cash flow projections on constant terms, based on the BC Dundee Group's LOM. The
main reason for the impairment was the reduction of the LOM at Magdalena from 12 years to 5 years due to
economic factors including expected increased mining cost, reduced mining productivity (increased distance from
the adit) and a change in the specification of the coal.

As at December 31, 2017, the net book value of Magdalena's assets included in property, plant and equipment was
R211.2 million before recognizing an impairment adjustment of R128.1 million.

The fair value calculation is categorized as level 3 in terms of the fair value hierarchy. A significant portion of the
inputs into the model were unobservable, as defined, and were based on Company specific assumptions. The key
assumptions used in the pre-tax cash flow projection are as follows: estimates of future production based on a LOM
model, assuming that all production is sold and using forecast macro assumptions, which are based on observable
market expectations. The pre-tax discount rate was estimated by calculating the Company's weighted average cost
of capital which was based on peer company information and other observable market inputs.

As at December 31, 2018, the Company has determined that there were no further indicators of impairment and no
indicators of a reversal of impairment.

There was significant estimation and judgment used when performing the fair value calculations (Refer to Notes 4.2
and 4.6). The key assumptions used in the value in use calculations as at December 31, 2017 were as follows:

                                                                               December 31, 2018           December 31, 2017   
Pre-tax discount rate                                                                     13.00%                      12.25%   
Gross fair value                                                                  R233.0 million              R121.1 million   
Costs to sell                                                                       R9.3 million                R6.0 million   
Recoverable amount                                                                R223.7 million              R115.1 million   

The main inputs in determining the recoverable amount at December 31, 2017 were as follows:

                                                                             2018-2021 (average)                   Long-term   
Bituminous sales prices - ZAR (real)                                                         935                         885   
Bituminous sales prices - US$ (real)                                                          84                          70   
Anthracite sales prices - ZAR (real)                                                       1 071                       1 074   
Rand: US$ Exchange rate                                                                    13.20                       13.30   
Pre-tax discount rate                                                                     12.25%                      12.25%   

8   FINANCE INCOME AND EXPENSE                                                               
                                                                                      December 31, 2018    December 31, 2017   
                                                                                                      R                    R   
Finance income                                                                                                                 
Interest on cash and restricted cash                                                          2 434 622            2 077 824   
Total                                                                                         2 434 622            2 077 824   
Finance expense                                                                                                                
Interest on borrowings                                                                     (29 465 376)         (26 836 340)   
Interest on the RCF loan facilities                                                         (1 137 043)          (1 117 300)   
Interest on STA accounts payable                                                            (4 323 414)          (6 089 748)   
Interest to South African Revenue Service ("SARS")                                                    -            (351 804)   
Unwinding discount on asset retirement obligation                                           (1 483 272)          (1 113 829)   
RCF Loan accretion expense                                                                 (13 585 885)         (12 932 321)   
Investec accretion of warrant asset                                                         (6 816 773)          (4 804 855)   
Other                                                                                         (204 613)          (1 187 873)   
Total                                                                                      (57 016 376)         (54 434 070)   

Interest on borrowings included royalties payable to Investec of R10.5 million for the year ended December 31, 2018
(December 31, 2017: R6.1 million) pursuant to the terms of the 6th Amendment Agreement under which a Life of
Mine Royalty ("LOMR") is payable to Investec on all bituminous coal sales with effect from July 1, 2017. The LOMR is
calculated at a rate of 3.54% on the sales of all bituminous coal mined from the Magdalena reserve. As at December
31, 2018, R5.7 million in royalties payable to Investec was included in Trade and other payables (December 31, 2017:
R6.1 million).

9   INCOME TAX                                                                                                                 
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Current tax:                                                                                                                   
Current tax on profits - South Africa                                                                  -         (1 107 529)   
Withholding tax - Canada                                                                        (49 218)                   -   
Income tax expense                                                                              (49 218)         (1 107 529)   

The major items causing the Company's income tax expense to differ from the South African statutory rate of 28%
(year ended December 31, 2017: 28%) are as follows:

                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Loss before income taxes                                                                    (68 326 104)       (122 581 445)   
Expected tax benefit at statutory tax rates                                                   19 131 309          34 322 805   
Adjustments resulting from:                                                                                                    
Benefits of tax losses not recognized                                                          (619 762)        (55 371 942)   
Income not subject to tax                                                                              -          22 500 174   
Permanent differences                                                                       (14 994 908)         (4 322 913)   
Foreign tax rate differential                                                                     55 745                   -   
Other temporary differences                                                                  (3 621 602)           1 764 347   
Income tax expense                                                                              (49 218)         (1 107 529)   

10   PROPERTY, PLANT AND EQUIPMENT

                                                                                          Office                                                   
                                                                                      equipment,    Development                                    
                                                         Land and                   fixtures and          costs                                    
                                                        buildings   Mining assets       fittings    capitalized   Mineral rights           Total   
                                                                R               R              R              R                R               R   
Year ended December 31, 2018                                                                                                                       
Opening net book value                                  2 177 512      69 850 758        447 452     26 766 779        7 643 415     106 885 916   
Additions                                                  93 756      19 596 213        945 318      9 045 462                -      29 680 749   
Change in estimates of asset retirement obligation              -      11 957 124              -              -                -      11 957 124   
Disposals                                                       -       (252 865)              -              -                -       (252 865)   
Impairment loss                                         (548 298)    (49 139 353)       (12 864)   (17 789 887)                -    (67 490 402)   
Reclassification of impairment recorded at year-end        12 932       6 413 590        130 376      1 086 517      (7 643 415)               -   
Depreciation                                            (212 715)    (17 468 074)      (373 252)    (4 242 649)                -    (22 296 690)   
Net book value at end of year                           1 523 187      40 957 393      1 137 030     14 866 222                -      58 483 832   
Year ended December 31, 2018                                                                                                                       
Cost                                                    7 757 896     406 070 234      8 850 063     49 468 000       14 009 756     486 155 949   
Accumulated depreciation                              (5 686 411)   (315 973 488)    (7 700 169)   (16 811 891)     (14 009 756)   (360 181 715)   
Impairment loss                                         (548 298)    (49 139 353)       (12 864)   (17 789 887)                -    (67 490 402)   
Net book value at end of year                           1 523 187      40 957 393      1 137 030     14 866 222                -      58 483 832   

                                                                                          Office                                                   
                                                                                      equipment,    Development                                    
                                                         Land and                   fixtures and          costs                                    
                                                        buildings   Mining assets       fittings    capitalized   Mineral rights           Total   
                                                                R               R              R              R                R               R   
Year ended December 31, 2017                                                                                                                      
Opening net book value                                  6 346 623     212 224 515      1 051 303     63 926 082       28 182 115     311 730 638   
Additions                                                       -      18 973 205        578 400     15 691 938                -      35 243 543   
Change in estimates of asset retirement obligation              -       1 440 780              -              -                -       1 440 780   
Disposals                                                       -       (163 178)       (14 740)              -                -       (177 918)   
Impairment loss                                       (3 577 872)   (114 771 878)      (735 209)   (43 980 533)     (12 558 907)   (175 624 399)   
Depreciation                                            (591 239)    (47 852 686)      (432 302)    (8 870 708)      (7 979 793)    (65 726 728)   
Net book value at end of year                           2 177 512      69 850 758        447 452     26 766 779        7 643 415     106 885 916   
Year ended December 31, 2017                                                                                                                       
Cost                                                   10 078 054     566 345 428      8 349 584     99 388 528      328 943 756   1 013 105 350   
Accumulated depreciation                              (4 322 670)   (381 722 792)    (7 166 923)   (28 641 216)    (308 741 434)   (730 595 035)   
Impairment loss                                       (3 577 872)   (114 771 878)      (735 209)   (43 980 533)     (12 558 907)   (175 624 399)   
Net book value at end of year                           2 177 512      69 850 758        447 452     26 766 779        7 643 415     106 885 916   

Office equipment includes items to the value of R0.1 million (December 31, 2017: R0.2 million) that are not directly
used in production and operations and relate to property, plant and equipment in the Company's corporate office in
South Africa. All property, plant and equipment is located in South Africa. Depreciation expense of R21.9 million
(year ended December 31, 2017: R65.0 million) was recognized in 'Cost of Sales'.

The impairment loss of R67.5 million recognized for the year ended December 31, 2018 related to closure of the
Magdalena underground operations and the resultant impairment of related property, plant and equipment to its
recoverable value (Refer to Note 7).

The impairment loss of R175.6 million recognized for the year ended December 31, 2017 relates to the impairment
of property, plant and equipment as the carrying value of the Group's assets exceeded the estimated recoverable
amount as determined by the impairment review performed by management (Refer to Note 7).

11   INVESTMENT IN FINANCIAL ASSETS                                                                         
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Security investments                                                                             194 484             181 465   
Total                                                                                            194 484             181 465  
 
The movement in the investment in financial assets is as follows:                                                              

                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Opening balance                                                                                  181 465          41 633 486   
Current year contributions                                                                             -           7 277 877   
Fair value adjustment                                                                                  -           4 717 045   
Unrealized marked-to-market gain on securities                                                         -             104 410   
Reallocation of Investment                                                                             -        (53 534 717)   
Effect of foreign currency exchange difference                                                    13 019            (16 636)   
Closing balance                                                                                  194 484             181 465   

The investment in financial assets consists of security investments held by the Group. During the year ended
December 31, 2017, it also included long-term investments to fund payment requirements associated with the
Group's rehabilitation obligations. This investment was restructured during the year ended December 31, 2017 and
reallocated to 'Other receivables - restricted' (Refer to Note 13). Prior to the restructure, the investment was held by
the Zinoju Trust which was formed with the sole purpose of applying its property for the rehabilitation of land in
order to discharge the statutory obligations of Zinoju.

Changes in the fair value of the investment are recorded in 'other income/(expense) - net' within profit or loss.

12   DEFERRED TAX                                                                                                              

There were no deferred taxes as at December 31, 2018 and December 31, 2017.                                                                               
                                                                                       December 31, 2018   December 31, 2017   
South Africa                                                                                           R                   R   
Provisions                                                                                       (4 439)           5 158 788   
Tax losses                                                                                             -          42 204 270   
Property, plant and equipment and other long-term assets                                               -        (47 369 618)   
Other                                                                                              4 439               6 560   
At end of year                                                                                         -                   -   

                                                                                       December 31, 2018   December 31, 2017   
Canada                                                                                                 R                   R   
Deferred income tax liabilities:                                                                                               
At beginning of year                                                                         (4 014 183)         (2 434 693)   
Current year timing differences                                                                2 847 058         (1 579 490)   
At end of year                                                                               (1 167 125)         (4 014 183)   
Deferred tax asset:                                                                                                            
At beginning of year                                                                           4 014 183           2 434 693   
Current year timing differences                                                              (2 847 058)           1 579 490   
At end of year                                                                                 1 167 125           4 014 183   
Deferred tax asset/(liability) - net                                                                   -                   -   

The balance is comprised of the following:                                                                               
                                                                                       December 31, 2018   December 31, 2017   
Canada                                                                                                 R                   R   
Tax losses                                                                                     1 167 125           4 014 183   
Other                                                                                        (1 167 125)         (4 014 183)   
At end of year                                                                                         -                   -   

No tax benefit has been recognized for the following temporary differences:                       

                                                                                       December 31, 2018   December 31, 2017   
Canada                                                                                                 R                   R   
Tax losses (expiring between 2027 and 2037)                                                  289 919 995         249 212 348   
Other                                                                                         40 238 492          41 708 050   
Total                                                                                        330 158 487         290 920 398   
Total C$                                                                                      31 261 894          29 522 705   

As at December 31, 2018, the Company had an unrecognized deferred tax asset of approximately R450.2 million
(year ended December 31, 2017: R442.2 million) relating to investments in subsidiaries. The asset has not been
recognized because the Company controls the timing of the reversal of the temporary differences and it is probable
that these differences will not reverse in the foreseeable future.

13      OTHER RECEIVABLES - RESTRICTED

Following the transition of financial provisions for asset retirement obligations to the National Environmental
Management Act ("NEMA"), Zinoju performed a closure cost assessment for financial provisions based on sudden
closure. This resulted in a shortfall between the investment held in the Zinoju Trust and the closure cost estimate on
which the investment was initially based. This triggered a review of the structure of the financial provisions in Zinoju.

After careful consideration of the alternative structures, it was proposed that Zinoju amend their method of
financial provisioning from a trust fund method to an insurance solution. The ultimate goal is to ensure that Zinoju
provide the DMR with the required financial guarantees for the mining rehabilitation liability calculated in terms of
NEMA.

During the year ended December 31, 2017, the Company completed the restructuring and provided the DMR with
the required guarantee of R63.0 million. The existing Trust at the time was dissolved and the fund balance of
R53.5 million was transferred to Centriq Insurance Company limited ("Centriq"). Any future shortfalls between the
DMR required guarantee amount and the value of the investment will be funded over the Life of Mine through the
growth in the investment. Management believes that no further cash contributions will be required in connection
with the R63.0 million financial guarantees issued to the DMR, provided there are no changes to the closure cost
liability.

The funds have been reclassified as 'other receivables - restricted' for accounting purposes due to the fact that the
funds will always revert to Zinoju for rehabilitation purposes.

The movement in the investment is as follows:                                                        
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Opening balance                                                                               53 211 988                   -   
Reallocation of Investment                                                                             -          53 534 717   
Commission paid                                                                              (1 260 014)         (1 260 015)   
Fair value adjustment                                                                          2 949 883             937 286   
Closing balance                                                                               54 901 857          53 211 988   

14   TRADE AND OTHER RECEIVABLES                                                                                               
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Non-current other receivables:                                                                                                 
- Deposits                                                                                     6 775 727           5 179 462   
- Prepayments                                                                                  1 047 579                   -   
Total non-current other receivables                                                            7 823 306           5 179 462   
Current trade and other receivables:                                                                                           
- Trade receivables                                                                           42 303 248         112 914 844   
Less: Provision for impairment of receivables                                                  (197 133)            (40 000)   
- Trade receivables - net                                                                     42 106 115         112 874 844   
- Value added tax (VAT)                                                                        1 618 132           1 473 616   
- Prepayments                                                                                  3 498 295           3 729 463   
- Harmonized Sales Tax (HST)                                                                     314 263             132 269   
- Deposits                                                                                             -           2 723 994   
- Other receivables                                                                              747 440             310 639   
Total current trade and other receivables                                                     48 284 245         121 244 825   

The current values of trade and other receivables approximate their carrying values. The maximum exposure to
credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does
not hold any collateral as security. There is no significant concentration of credit risk in respect of any particular
customer.

The carrying amounts of the Group's trade and other receivables are denominated in the following currencies:

                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Canadian Dollars                                                                                 436 414             249 376   
United States Dollars                                                                          2 529 047           2 242 087   
Rands                                                                                         45 318 784         118 753 362   
Total                                                                                         48 284 245         121 244 825   

Movements on the Group's provision for impairment of receivables are as follows:

                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Opening balance                                                                                   40 000             596 094   
Provision (released)/raised, net                                                                 157 133           (556 094)   
Closing balance                                                                                  197 133              40 000   

The creation and release of the provision for impairment of trade receivables has been included in profit or loss. The
other classes within trade receivables do not contain impaired assets.

Trade receivables disclosed above include amounts that are past due at the end of the reporting period for which
the Group has not recognized an allowance for doubtful debts because there has not been a significant change in
credit quality and the amounts are still considered recoverable.

Age of receivables that are past due but not impaired:                                                        
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
30-60 days                                                                                    19 575 008           1 968 451   
61-90 days                                                                                     3 623 775             914 913   
>91 days                                                                                         111 053             219 325   
Total                                                                                         23 309 836           3 102 689   

15   INVENTORIES                                                                                                               
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Consumables                                                                                    1 435 698           2 465 354   
Work in progress                                                                               1 768 031           1 496 908   
Finished goods                                                                                38 619 952          34 132 810   
Total                                                                                         41 823 681          38 095 072   

Depreciation of R2.2 million was included in inventory at December 31, 2018 (December 31, 2017: R4.3 million).
Inventory expensed during the year ended December 31, 2018 were R24.9 million (year ended December 31, 2017:
R21.2 million).

16   NON-INTEREST BEARING RECEIVABLES                                                        
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Non-interest bearing receivables:                                                                                              
Other                                                                                                  -           2 015 578   

The non-interest bearing receivables were written off during the financial year ended December 31, 2018.

17   RESTRICTED CASH                                                                                                
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Guarantee to Transnet Freight Rail ("TFR")                                                     8 000 000           8 000 000   
Guarantee to Department of Mineral Resources ("DMR") & Eskom                                   3 200 000           3 200 000   
Total                                                                                         11 200 000          11 200 000  
 
18   CASH AND CASH EQUIVALENTS                                                                                                 
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Cash in bank                                                                                   5 231 958          21 428 994   
Cash is denominated in the following currencies:                                                                               
Canadian Dollars                                                                                 448 084               (645)   
United States Dollars                                                                             37 695             108 949   
Rands                                                                                          4 746 180          21 320 690   
Total                                                                                          5 231 958          21 428 994 
  
19   SHARE CAPITAL                                                                                                             
                                                                                        Number of shares        Stated value   
                                                                                                                           R   
Balance at December 31, 2016                                                                 394 803 022       1 075 881 497   
Shares issued to STA                                                                          13 005 259           6 515 420   
Balance at December 31, 2017                                                                 407 808 281       1 082 396 917   
Shares issued to STA                                                                          13 544 315           6 908 433   
Balance at December 31, 2018                                                                 421 352 596       1 089 305 350   

The Company is authorized to issue an unlimited number of Common Shares at no par value.

As set out in further detail in Note 22, the Company has raised an aggregate US$29 million convertible loan from
RCF, of which US$27 million is outstanding as at December 31, 2018, in respect of which interest is settled by the
Company by way of the issuance of Common Shares to RCF at the 20-day volume weighted average price ("VWAP")
as at the date the interest is due. The original convertible loan facility of US$6.0 million ("RCF Original Convertible
Loan") and the bridge loan facility of US$4.0 million ("RCF Bridge Loan") were entered into in September 2013 and
February 2014 respectively, and on July 3, 2014, BC Corp closed the final tranche of US$15.0 million resulting in an
aggregate US$25.0 million convertible loan facility ("RCF US$25 million Loan") ("First Amended RCF Agreement").

On March 27, 2015, BC Corp entered into a second amended and restated convertible loan agreement with RCF
("Second Amended RCF Agreement") to secure an additional US$4.0 million loan facility (collectively with the RCF
US$25 million Loan, the "RCF Convertible Loan"). On December 2, 2015, BC Corp entered into a third amended and
restated convertible loan agreement with RCF ("Third Amended RCF Agreement"). Effective September 30, 2016, the
Company entered into an additional amendment to the convertible loan agreement with RCF (the "2016
Amendment"), in terms of which RCF agreed to an interest holiday beginning July 1, 2016, with a reduction in the
interest rate to 1.29% during the interest holiday period. The interest holiday period ends the earliest of maturity,
occurrence of an event of default or lender's delivery of an interest holiday period termination notice. Accrued
interest will be payable on the maturity date in cash, or Common Shares.

During the financial years ended December 31, 2018 and December 31, 2017, no Common Shares were issued to
settle interest on the RCF Convertible Loan.

As set out in Note 2.1, pursuant to the STA Equity Settlement Agreement ("ESA") dated October 28, 2015, STA
agreed that Zinoju Coal may elect to make use of an equity mechanism for a portion of the services rendered by STA
to Zinoju Coal.

The Common Shares were issued by Buffalo Coal Corp, and accordingly, Buffalo Coal Corp, agreed that the amounts
owed by Zinoju to STA in respect of the equity portion have been assumed and settled by Buffalo Coal Corp, on
behalf of Zinoju Coal. In terms of provision 6(i) of the ESA, the parties agreed that the percentage of shares held by
STA shall never exceed 9.9% of the total Common Shares of Buffalo Coal Corp.

Following the Common Shares issued to STA during the financial year ended December 31, 2018, STA held 9.9% of
the issued Common Shares of Buffalo Coal Corp as at December 31, 2018, and the STA "ESA" was fully
and finally discharged at year-end.

During the financial year ended December 31, 2018, the Company issued 13 544 315 Common Shares to STA based
on an agreed share price of C$0.05 to settle a portion of the contract mining fees. During the financial year ended
December 31, 2017, the Company issued 13 005 259 Common Shares to STA based on an agreed share price of
C$0.05 to settle a portion of the contract mining fees. The shares issued were valued at the fair value of the services
received.

20   RESERVES                                                                                                                  
                                                                                         Weighted average   Value of options   
                                                                  Number of options   exercise price (C$)                  R   
Closing balance at December 31, 2016                                      3 373 303                  0.12          2 059 820   
Granted and vested                                                                -                     -             40 839   
Expired/cancelled                                                          (30 000)                  1.80          (293 604)   
Closing balance at December 31, 2017                                      3 343 303                  0.11          1 807 055   
Granted and vested                                                                                                     2 147   
Expired/cancelled                                                       (1 084 349)                  0.25        (1 185 078)   
Closing balance at December 31, 2018                                      2 258 954                  0.07            624 124   

Employee share option plan

The Company has an ownership-based compensation scheme, administered by the Board of Directors of the
Company, for directors, officers, employees and consultants. A new plan was adopted by the Board of Directors on
November 30, 2015, as required in terms of the move by the Company from the TSX to the TSXV on December 18,
2015. The plan was ratified by shareholders at the annual general meeting of the Company on June 28, 2016.

The plan provides for the issuance of share options to acquire up to 10% of the Company's issued and outstanding
capital. The number of shares reserved for issuance pursuant to the grant of share options will increase as the
Company's issued and outstanding share capital increases. In accordance with the terms of the plan, directors,
officers, employees and consultants of the Company may be granted options to purchase Common Shares at an
exercise price determined by the Board of Directors, but which shall not be lower than the discounted market price
of the underlying Common Shares at the time of grant. Each share option converts into one Common Share of the
Company on exercise.

No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to
dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

On August 26, 2016, 600 000 share options were granted to employees of the Company of which 150 000 share
options were forfeited prior to the year ended December 31, 2016.

One third vested immediately and another third on August 26, 2017. The balance vested on August 26, 2018.

A negligible amount was included in profit or loss as stock-based compensation expense related to the fair value of
the portion of options vested during the financial years ended December 31, 2018 and December 31, 2017 for
directors and officers. The options expire five years from the date of issue, or immediately upon the resignation of
the director, officer, employee or consultant.

No share options were granted during the years ended December 31, 2018 and December 31, 2017.

Share options outstanding at the end of the financial year have the following exercise prices:

Grant date                                                            Exercise price   December 31, 2018   December 31, 2017   
                                                                                (C$)                   R                   R   
August 13, 2013                                                                 0.29                   -             638 000   
August 12, 2014                                                                 0.11             125 000             250 000   
April 20, 2015                                                                  0.07           1 558 954           1 880 303   
November 10, 2015                                                               0.04             125 000             125 000   
August 26, 2016                                                                 0.05             450 000             450 000   
Total                                                                                          2 258 954           3 343 303   

The weighted average remaining contractual life of share options outstanding at December 31, 2018 is 1.57 years
(December 31, 2017: 2.13 years). All options outstanding at December 31, 2018 are exercisable. Of the 3 343 303
options outstanding at December 31, 2017, 3 193 303 options were exercisable.

Restricted Share Units

The Company has a RSU Incentive Plan in place in terms of which the Company is authorized to grant and issue RSUs
to directors and officers of the Company. Each RSU shall entitle the director or officer to receive one Common Share
upon completion of certain terms. The Common Shares will be repurchased from the open market and held in trust
for subsequent issuance.

As of December 31, 2018, and December 31, 2017, no RSUs were granted or outstanding.

Equity-settled non-employee benefits

As at December 31, 2018, as set out in Note 2.1, pursuant to the STA ESA dated October 28, 2015, STA agreed that
Zinoju Coal may elect to make use of an equity settlement mechanism for a portion of the services rendered by STA
to Zinoju coal. All shares for services rendered by STA have been issued by the year ended December 31, 2018, and
there are no outstanding service fees to be settled in the form of Common Shares.

Black Economic Empowerment option

During the year ended February 29, 2012, BC Dundee assisted one of its BEE partners to buy out the interest in
Zinoju held by its other BEE partner. This resulted in the issuance of a new call option to the continuing BEE partner
which represented the issuance of an equity-settled share-based payment.

21      BORROWINGS

Borrowings consisted of the Investec loan facilities as detailed below:

                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Investec loan facilities                                                                     100 982 963         187 955 977   
Current portion                                                                            (100 982 963)       (187 955 977)   
Long-term portion                                                                                      -                   -   

On July 3, 2014, BC Dundee finalized a restructuring of the Investec loan facilities ("First Amended Investec
Agreement") on the following terms:

-     five-year senior secured amortizing term loan facility of R90.0 million (the "Term Loan Facility"). The Term
      Loan Facility accrues interest monthly at JIBAR plus 4%, with only interest having been payable on a quarterly
      basis up to December 2015. The first principal payment was due in December 2015 (refer below for the Third
      Amendment) and going forward, principal payments are due on a quarterly basis. The First Amended Investec
      Agreement required the Company to make payments if excess cash was available during the 18-month grace
      period up to December 2015 up to a maximum of R4.5 million on a quarterly basis. No such payments were
      made during 2015;
-     five-year senior secured loan facility of R50.0 million (the "Bullet Facility"). The Bullet Facility is repayable by
      way of a bullet repayment at the end of the facility life. The Bullet Facility accrues interest monthly at JIBAR
      plus 4% with the first interest payment having been due in December 2015 and quarterly repayments of
      interest to be made going forward; and
-     five-year senior secured revolving credit facility of R30.0 million (the "Working Capital Facility"). The Working
      Capital Facility is repayable on the final maturity date being July 3, 2019, and bears interest at prime plus 0.5%,
      payable monthly.

On December 2, 2015, BC Dundee closed a second amended and restated term loan and revolving credit facility with
Investec ("Second Amended Investec Agreement"), whereby Investec agreed to extend BC Dundee's working capital
facility from R30.0 million to R80.0 million, comprising two tranches of R25.0 million each. The conditions to the first
and second tranche were fulfilled and drawn in December 2015 and March 2016 respectively. On December 18,
2015, BC Dundee entered into a third amendment to the Investec loan agreement ("Third Amendment"), in terms of
which the repayment schedule for the term loan facility was replaced with a new schedule with principal repayments
commencing on March 31, 2016.

Due to continued cash constraints, Investec was approached during the first quarter of 2016 for a deferral of the
term loan facility repayment due on March 31, 2016. On March 31, 2016, BC Dundee entered into a fourth
amendment to the Investec term loan and revolving credit agreement ("Fourth Amendment") in terms of which the
repayment schedule for the term loan facility was replaced with a new schedule with principal repayments
commencing on June 30, 2016.

In addition, surplus cash at each quarter-end in excess of R30.0 million had to be used to reduce the R80.0 million
working capital facility back to R30.0 million and a clause was included restricting outflows of funds from BC Dundee
to BC Corp between April 1, 2016 and June 30, 2016, unless prior written consent was obtained from Investec. To
date, no cash has been swept to reduce the working capital facility.

Investec was again approached for a deferral of the term loan facility repayment due on June 30, 2016 following
which BC Dundee entered into a fifth amendment to the term loan and revolving credit agreement ("Fifth
Amendment") in terms of which the repayment schedule for the term loan facility was replaced with a new schedule
with principal repayments commencing on September 30, 2016. Investec extended the restriction on the outflows
of funds from BC Dundee to BC Corp to September 30, 2016, unless prior written consent was obtained from
Investec.

On each of September 30, 2016 and December 31, 2016 the Company made the term loan facility repayments of
R7.5 million.

Early in calendar 2017, drilling results in Panel 417 of the Magdalena mine revealed a dyke of 22 meters thick, with a
13.5 meter down-throw. In terms of the life of mine planning for Magdalena, the mine had to develop through this
dyke in order to access the LOM block towards South-West of the reserves, to establish additional pit-room. Funding
was required for this development, and Investec was approached to make the undrawn R22.0 million working
capital facility available for this purpose.

On April 13, 2017, BC Dundee entered into a sixth amendment to the term loan and revolving credit agreement
("Sixth Amendment") and the undrawn working capital facility balance was made available for drawdown. In terms
of the Sixth Amendment, Investec released R22.0 million as working capital for the purpose of ensuring the Panel
417 project is completed timeously and a Life of Mine Royalty ("LOMR") became due and payable to Investec on all
bituminous coal sales with effect from July 1, 2017, calculated at a rate of 3.54% on all bituminous coal sold which
was mined from the Magdalena reserve. As of December 31, 2017, the Company had utilized R79.8 million of the
working capital facility.

Due to continued cash constraints during calendar 2017, BC Dundee was not able to meet its quarterly repayment
obligations to Investec during the year ended December 31, 2017 and was also not able to meet other specified debt
covenants that were required at the end of each quarter of 2017, which placed the Company in breach of certain of
these covenants. Such breach constitutes an event of default under the debt agreement whereby Investec is entitled
to request early payment of the outstanding debt. As a result of the events of default, management classified the
total Investec debt of R188.0 million at the end of December 31, 2017 as current borrowings.

On March 19, 2018, BC Dundee agreed to amendments to the term loan and revolving credit agreement (the
"Amendment") that resulted in:

    -   BC Dundee immediately paying Investec the amount of R36.6 million due to Investec under the existing
        Investec Facility at the time, of which R30.0 million reduced the aggregate amount outstanding on the
        Investec Facility, with the remaining R6.6 million applied to the mine royalty payment (R6.1 million) and the
        balance (R0.5 million) applied to default interest, all of which were due and payable on March 16, 2018 (this
        payment was effected on March 19, 2018);
    -   payment of the R7.5 million instalment due on March 31, 2018 being extended to June 29, 2018;
    -   Investec agreeing not to exercise its acceleration rights with respect to any existing events of default under
        the Investec Facility and appointing a technical advisor until June 30, 2018 to provide certain monthly
        reports to Investec; and
   -    The Group having to provide Investec with a certified copy of a signed mandate with Northcott, pursuant to
        which Northcott conducted a review of the strategic options available to the Group. The Northcott mandate
        replaced the agreement in place with Northcott at the time. In September 2018, the Company suspended
        the strategic review process and accordingly also suspended Northcott's services.

On June 25, 2018, BC Dundee also settled the required principal payments of R7.5 million for each of the March and
June 2018 quarters (R15 million in total). On August 2, 2018, Investec again agreed not to exercise its acceleration
rights with respect to any existing events of default under the Investec Facility until September 28, 2018. On
September 25, 2018, BC Dundee settled a further R25 million principle payment. On October 3, 2018, a further R5
million was paid to Investec, thereby settling the Term Loan Facility in full and reducing the total outstanding loan
owing to Investec to R125.3 million.

On November 7, 2018, the Company accepted and agreed to Investec's amendment to the Term Loan and Revolving
Credit Facility Agreement. Pursuant to the amended agreement, the final maturity date has been extended from
June 30, 2019 to December 31, 2019, with revised quarterly repayment instalments of R20 million at the end of
December 2018 and R26 million at the end of each quarter of calendar 2019. In addition, Investec agreed not to
exercise its acceleration rights with respect to any existing events of default under the Investec Facility until
December 31, 2018.

On December 31, 2018, a further principal payment of R20 million was paid to Investec, reducing the total
outstanding loan to R101.0 million.

The movement in the Investec borrowings is as follows:

                                                                                     December 31, 2018     December 31, 2017   
                                                                                                     R                     R 
Opening balance                                                                            187 955 977           161 016 413   
Accretion of warrant asset                                                                   6 816 773             4 800 140   
Effect of foreign currency exchange difference                                                  98 381                     -   
Amortisation of deferred cost                                                                1 129 715               440 163   
Interest accrued                                                                            16 649 213            20 523 512   
Interest paid                                                                             (16 667 096)          (20 324 251)   
Net drawdown from working capital facility                                                           -            21 500 000   
Repayments                                                                                (95 000 000)                     -   
Current portion                                                                            100 982 963           187 955 977 
  
The current portion as at December 31, 2018 and December 31, 2017 comprised of the following:                         

                                                                                     December 31, 2018     December 31, 2017   
                                                                                                     R                     R   
Investec Loan Facilities Outstanding                                                       105 327 746           200 240 472   
Term Loan Facility                                                                                   -            75 000 000   
Bullet Facility                                                                             25 508 327            45 508 326   
Working Capital Facility                                                                    79 819 419            79 732 146   
Less: Warrant asset                                                                        (4 344 783)          (11 154 781)   
Less: Deferred costs                                                                                 -           (1 129 715)   
Current portion                                                                            100 982 963           187 955 977   

Warrant asset

Included in the Investec borrowings as at December 31, 2018 is a warrant asset of R4.3 million (December 31, 2017:
R11.2 million) which will be accreted to a zero value on the maturity date of June 30, 2019. The accretion is due to
the difference between the amortization of the effective interest rate and the actual interest rate on the liability
component as described in the warrant liability section below.

Warrant liability

In connection with the First Amended Investec Agreement, Investec subscribed for 34 817 237 warrants in the
Company with a strike price of C$0.1446, the proceeds of which, if exercised, will be applied against settlement of
the Bullet Facility. RCF has the right to acquire the warrants from Investec at agreed pricing until July 3, 2019.

The Bullet Facility and the warrants have been treated as a compound financial instrument, as the Bullet Facility
could effectively be settled through the issuance of Common Shares. Furthermore, an embedded derivative exists
due to the warrants being denominated in Canadian Dollars and the functional currency of the Company being
Rands. The Bullet Facility has been recognized in two parts, a liability component (included in borrowings) and a
warrant liability. The liability component will be accreted to its face value of R40.5 million using the effective interest
rate method at approximately 35.5%.

The carrying value of the warrant liability was calculated using the Black-Scholes option pricing model:

                                                                                   December 31,   December 31,       Initial   
                                                                                           2018           2017   assumptions   
Volatility (based on historical share price)                                             131.5%         114.0%        100.0%   
Life (in years) to maturity date                                                            0.5            1.5           5.0   
Risk-free interest rate                                                                   1.90%          1.64%         1.71%   
Share price (C$)                                                                           0.01           0.01          0.10   
Warrant no of shares                                                                 34 817 237     34 817 237    34 817 237   
Warrant valuation (C$)                                                                      741          2 994     2 284 865   
Warrant valuation (R)                                                                     7 825         29 507    22 987 796   

The movement in the warrant liability is as follows:
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Opening balance                                                                                   29 507             344 627   
Fair value adjustment                                                                          (102 910)           (307 436)   
Foreign exchange differences                                                                      81 228             (7 684)   
Closing balance                                                                                    7 825              29 507   

Security

The Investec facilities are secured as follows:

BC Corp entered into the following security agreements with Investec - a cession in security over its bank account
held with Investec, a cession in security over its bank accounts held in Canada and a pledge and cession in
securitatem debiti of all the shares, securities and other ownership interests of BC Corp in BC Dundee and BC and
debt claims against BC Dundee, BC and Zinoju.

BC Dundee entered into the following security agreements with Investec - a cession in security granted by BC
Dundee in respect of BC Dundee's rights, title, claims and interests in and to the relevant assets which include: all
insurances and all the proceeds receivable under those insurances, trade receivables, claims of BC Dundee under the
mining contract with Zinoju and all the bank accounts of BC Dundee and all rights to cash balances standing to the
credit of those bank accounts. BC Dundee also entered into a pledge and cession in securitatem debiti of all BC
Dundee's shares in and claims against Zinoju.

BC Dundee has passed a first-ranking covering mortgage bond over certain land and a first-ranking special notarial
bond over specified movable property of BC Dundee and a first and second ranking general notarial bond over all of
BC Dundee's movable assets.

22      RCF LOAN FACILITIES

RCF Original Convertible Loan

On September 4, 2013, the Company closed a secured US$6.0 million (approximately R61.0 million) RCF Original
Convertible Loan. The RCF Original Convertible Loan had an original maturity date of June 30, 2016. The principal on
the RCF Original Convertible Loan was convertible into Common Shares at a price of C$0.36 per share.

The issuance of Common Shares to RCF upon conversion of the loan, for interest payments and for the establishment
fee was subject to shareholder approval which was received at the annual and special meeting that was held on
September 11, 2013. Prior to receipt of shareholder approval, the loan bore interest at a rate of 10% per annum,
payable on each calendar quarter in cash or Common Shares at a price per share equal to the 20-day VWAP as at the
date the payment was due. Upon receipt of shareholder approval, the interest rate decreased to 8% per annum.

The RCF Original Convertible Loan was secured by a cession of the shares of BC Dundee, a special notarial bond over
the anthracite stockpile as at July 31, 2013 and a cession of a specified bank account into which all proceeds from the
sale of such anthracite stockpile were transferred.

In addition, BC Dundee provided a guarantee to RCF guaranteeing the payment and performance of all liabilities and
obligations of the Company to RCF under the RCF Original Convertible Loan. The guarantee was limited to
restrictions imposed by the South African Reserve Bank, if any.

RCF Bridge Loan

On February 4, 2014, the Company entered into the First Amended RCF Agreement for the secured RCF US$25
million loan which comprised the RCF Bridge Loan, a convertible loan of up to US$15.0 million and a refinancing of
the RCF Original Convertible Loan.

On February 5, 2014, the Company closed the secured US$4.0 million (approximately R42.9 million) RCF Bridge Loan,
being the first tranche of the RCF US$25 million loan. The RCF Bridge Loan bore interest at 15% per annum, payable
in arrears at the end of each month, in cash or Common Shares at a price per share equal to the 20-day VWAP as at
the date the payment was due. The RCF Bridge Loan would roll up into the US$25 million loan upon shareholder
approval with the same terms and conditions as the RCF US$25 million loan.

The RCF Bridge Loan was secured by the security provided by the Company for the RCF Original Convertible Loan
(other than the special notarial bond over the anthracite stock pile which was released as set out below).

RCF Convertible Loan

On July 3, 2014, after receiving shareholder approval at the special and annual general meeting held on
June 27, 2014, BC Corp closed the final tranche of the RCF US$25 million loan of US$15.0 million. Furthermore, the
RCF Bridge Loan, the RCF Original Convertible Loan and the final tranche were rolled up into one facility, the RCF
Convertible Loan, which was convertible at a price of C$0.1446 per Common Share and matured on June 30, 2019.
The RCF Convertible Loan bore interest at 12% per annum, payable in arrears at the end of each month, in cash or
Common Shares at a price per share equal to the 20-day VWAP as at the date the payment was due.

There were two types of advances per the First Amended RCF Agreement in respect of the advance of the final
tranche of US$15.0 million:

-      scheduled advances of funds by RCF to BC Corp of approximately US$4.8 million (approximately R48.5
       million); and
-      equipment advances of approximately US$10.2 million (approximately R103.0 million), whereby funds
       were advanced by RCF directly to equipment suppliers on behalf of the Company.

In terms of the First Amended RCF Agreement, RCF took a first ranking special notarial bond over the new equipment
as specified in the First Amended RCF Agreement and acquired using the proceeds of the RCF Convertible Loan. In
addition, RCF took second ranking security over BC Dundee's shares and all other moveable and immovable assets of
the Company.

On March 27, 2015, BC Corp closed the Second Amended RCF Agreement and secured an additional US$4.0 million
loan facility which was advanced as a bridge loan ("2015 Bridge Loan"). On June 19, 2015, upon the Company
receiving shareholder approval at the annual and special meeting of shareholders, the 2015 Bridge Loan rolled over
into the RCF Convertible Loan, under the same terms and conditions except for the amendments to the interest rate
and conversion price on the full US$29.0 million facility as set out below.

The 2015 Bridge Loan bore interest at a rate of 15% per annum, payable on the maturity date which was the earlier
of the date on which the shareholder approval was received or June 30, 2015. No establishment fees were incurred
on the 2015 Bridge Loan. Upon receipt of the shareholder approval, interest became payable in Common Shares at a
price per share equal to the 20-day VWAP as at the date the payment was due. In addition, the interest rate on the
RCF Convertible Loan was increased to 15% per annum and the conversion price was decreased to C$0.0469, a 25%
discount to the 5-day VWAP as at January 30, 2015.

On December 2, 2015, BC Corp entered into the Third Amended RCF Agreement, whereby RCF agreed to the RCF
Conversion in terms of which it will convert an aggregate of US$20.0 million of the RCF Convertible Loan into
Common Shares over a two-year period at the conversion price of C$0.0469 per Common Share, subject to a
minimum conversion of US$10.0 million in the first year. As a result of restrictions that prevented RCF from being
able to exercise, this deadline has been extended indefinitely as at December 31, 2016. The RCF First Tranche
Conversion of US$2.0 million was converted on December 3, 2015 on the closing of the transactions with RCF and
Investec as described herein resulting in 56 963 752 Common Shares being issued to RCF.

The balance of the RCF Convertible Loan will remain in place on existing terms, other than the interest being settled
quarterly not monthly, and in respect of certain amendments to the interest provisions as detailed below:

-     Prior to the date of completion of the RCF Conversion, interest will be settled through the issuance of
      Common Shares, priced at the 20-day VWAP. Following the date of completion of the RCF Conversion,
      interest will be payable in cash subject to BC Dundee having paid Investec its scheduled principal repayment
-
      for the prior quarter. If Investec's principal repayment has not been made, RCF's interest will accrue until such
      time as Investec has been paid, subject to RCF's election for interest to be settled through the issuance of
      Common Shares.

-     As of the date the Company was delisted from the TSX, the percentage interest rate is determined as follows:
            - If the 20-day VWAP is greater than C$0.05 per Common Share then the interest rate will be 15% per annum;
            - If the 20-day VWAP is less than or equal to C$0.0313 per Common Share then the interest rate will
                be 24% per annum; and
            -   If the 20-day VWAP is greater than C$0.0313 but less than C$0.05 per Common Share then the
                interest rate will be calculated as 0.0075/20-day VWAP.

In terms of the Third Amended RCF Agreement, RCF has also released all security held in respect of the RCF
Convertible Loan, including the guarantee from BC Dundee.

Effective September 30, 2016, the Company entered into the 2016 Amendment, the terms of which were
substantially agreed upon on September 30, 2016. In terms of the 2016 Amendment, RCF agreed to an interest
holiday beginning July 1, 2016, with a reduction in the interest rate to 1.29% during the interest holiday period. The
interest holiday period ends the earliest of maturity, occurrence of an event of default or lender's delivery of an
interest holiday period termination notice. Accrued interest will be payable on the maturity date in cash, or Common
Shares.

As of December 31, 2018 and December 31, 2017, the Company was fully drawn on the US$27.0 million (December
31, 2018: R388.7 million; December 31, 2017: R334.0 million) RCF Convertible Loan, after the RCF First Tranche
Conversion.

The movement in the RCF Convertible Loan was as follows:

                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Opening balance                                                                              314 762 527         336 288 222   
Accretion expense                                                                             13 585 885          12 932 321   
Effect of foreign currency exchange difference                                                52 738 971        (34 458 016)   
Current portion                                                                              381 087 383                   -   
Long-term portion                                                                                      -         314 762 527   

The RCF loan becomes due and payable as at June 30, 2019. Consequently, the entire liability has been presented as
current as of December 31, 2018. As at April 15, 2019, RCF agreed to extend the maturity date until December 31,
2019 to allow the Company to obtain other financing in order to settle this amount as it currently does not expect to
have the means to repay this amount in full on the due date (Refer Note 2, Summary of significant accounting
policies - Basis of Preparation and Going Concern).

The RCF Convertible Loan has been recognized in two parts, a liability component and a Conversion Option Liability.
An embedded derivative exists due to the convertible loan facility being denominated in US Dollars, the conversion
feature being exercisable in Canadian Dollars and the functional currency being Rands. The liability component will
be accreted to its face value of US$27.0 million (approximately R388.7 million) (December 31, 2017: US$27.0 million
(approximately R334.0 million)) using the effective interest rate method at approximately 5.3% (December 31, 2017:
5.3%).

The fair value of the Conversion Option Liability was calculated using the Black-Scholes option pricing model:

                                                                                  December 31,   December 31,        Initial   
                                                                                          2018           2017    assumptions   
Volatility (based on historical share price)                                            131.5%          60.2%   51.0%-107.0%   
Life (in years) to maturity date                                                           0.5            1.5        3.9-5.0   
Risk-free interest rate                                                                  1.90%          1.64%      0.5%-1.5%   
Share price (C$)                                                                          0.01           0.01    0.035-0.095   
Potential shares                                                                   784 738 593    722 609 808    720 351 931   
Value of convertible feature (C$)                                                      296 616          2 871     18 191 938   
Value of convertible feature (R)                                                     3 132 577         28 289    182 348 706   

Movement in the Conversion Option Liability was as follows:                                                          
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Opening balance                                                                                   28 289          31 905 346   
Fair value adjustment                                                                          (831 739)        (31 720 388)   
Foreign currency translation adjustment                                                        3 936 027           (156 669)   
Current portion                                                                                3 132 577                   -   
Long-term portion                                                                                      -              28 289   

The Conversion Option Liability is linked to the RCF Loan facility which becomes due and payable as at June 30, 2019.
Consequently, the entire liability has been classified as current as of December 31, 2018.

Security

In terms of the First Amended RCF Agreement, the Company was released from the security previously provided to
RCF which included a special notarial bond over the anthracite stockpile at July 31, 2013, the cession of a specified
bank account into which all the proceeds from the sale of such anthracite stockpile were transferred and security
over BC Dundee's shares.

In terms of the Third Amended RCF Agreement, RCF has released all security held in respect of the RCF Convertible
Loan, including the guarantee from BC Dundee.

23   ASSET RETIREMENT OBLIGATION                                                                                  
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Opening balance                                                                               35 898 183          29 358 217   
Change in estimate                                                                            13 993 038           6 539 966   
- Included in property, plant and equipment                                                   11 957 124           1 440 780   
- Allocation to current provisions                                                               552 642           3 985 358   
- Unwinding of discount                                                                        1 483 272           1 113 828   
Closing balance                                                                               49 891 221          35 898 183   
Current portion                                                                              (5 285 246)         (5 653 446)   
Non-current portion                                                                           44 605 975          30 244 737   

South African mining companies are required by law to undertake rehabilitation works as part of their ongoing
operations. These environmental rehabilitation costs are funded by contributions into long-term investments (Refer
to Note 11). A provision is recognized based on the net present value of the estimated cost of restoring the
environmental disturbance that has occurred at the statement of financial position date. A portion of the total
obligation is expected to be paid out within 7 years in relation to Magdalena and within 15 years in relation to
Aviemore. The expected timing of the cash outflows in respect of the provision is on the closure of the various
mining operations. However, certain current rehabilitation costs are charged to this provision as and when incurred.

The change in estimates during the year ended December 31, 2018 included R12.0 million that resulted from a
reduction in rehabilitation period of the rehabilitation obligation associated with Magdalena from 15 years to 7 years
based on the decision to close Magdalena (Refer to Note 7).

                                                                                       December 31, 2018   December 31, 2017   
Discount rate (%)                                                                                   9.62                9.43   
Inflation rate (%)                                                                                  5.30                5.20  
 
24   TRADE AND OTHER PAYABLES                                                                                                  
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Trade payables                                                                                54 184 214         117 846 882   
Audit fees                                                                                     1 542 259           1 178 860   
Receiver of Revenue - VAT                                                                      3 773 508           4 279 703   
Investec Royalty outstanding                                                                   5 741 317           6 113 140   
Sundry payables and accruals                                                                  12 229 531          12 105 297   
Provision DMR Fines                                                                            4 450 000           2 450 000   
Retrenchment provision                                                                         2 353 748                   -   
Leave pay provision                                                                           11 077 891          12 523 773   
Total                                                                                         95 352 468         156 497 655   


The fair value of trade and other payables approximates their carrying amount, as the impact of discounting is not
considered significant.

Included in trade payables as of December 31, 2018 is R22.1 million (December 31, 2017: R93.1 million) owing to
STA. Interest is accruing monthly on the deferred amount at the prime bank overdraft rate in South Africa.

The provision for DMR fines relates to section 24G notices issued to the Company (Refer to Note 29).

The retrenchment provision as at December 31, 2018 related to the remaining 27 people to be retrenched from the
Magdalena underground operation at the end of February 2019 as discussed in Note 2.1.

The carrying amounts of the Group's trade and other payables are denominated in the following currencies:

                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Canadian Dollars                                                                               4 243 928           3 298 638   
United States Dollars                                                                          1 781 632           1 656 003   
Rands                                                                                         89 300 747         151 519 200   
Great British Pound                                                                               26 161              23 814   
Total                                                                                         95 352 468         156 497 655 
  
25   CURRENT TAX ASSETS AND LIABILITIES                                                                                        
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Current tax assets:                                                                                                            
Tax refund receivable                                                                            864 711             864 710   
Total                                                                                            864 711             864 710   
Current tax liabilities:                                                                                                       
Income tax payable                                                                                     -                   -   
Witholding tax payable                                                                           828 558           2 901 399   
Total                                                                                            828 558           2 901 399   

Witholding tax

Under the terms of the loans granted by RCF to the Company (Refer to Note 22), the Company was required to make
all interest payments to RCF in full, without deduction for any applicable taxes. During September 2013 the Company
and RCF become related parties and were deemed not to be dealing at arm's length pursuant to paragraph 251 of
the income tax act of Canada. Consequently, RCF was required to pay non-resident tax on interest payments made
to the Company on or after September 11, 2013.

The Company was not aware at the time that interest payments made on the loans on or after September 11, 2013
were subject to non-residents tax and failed to withhold and remit these amounts.

On July 31, 2018, the Company calculated the amount of withholding taxes payable to be C$312 066. A voluntary
disclosure was filed with the Canada Revenue Agency ("CRA") and the corresponding amount paid on August 14,
2018. The CRA has since acknowledged receipt of the Company's request for relief under the voluntary disclosure
program and is currently conducting a preliminary review.

Included in the current tax liability provision as at December 31, 2018 is an amount of C$89 762 (R997 981) for
potential interest and penalties related to the withholding tax.

26     FINANCIAL INSTRUMENTS BY CATEGORY

The Company's financial assets and financial liabilities as at December 31, 2018 and December 31, 2017 were as
follows:

Financial instruments                           Financial       Fair value   Liabilities at        Financial           Total   
                                                assets at   through profit       fair value   liabilities at                   
                                           amortized cost          or loss   through profit   amortized cost                   
                                                                                    or loss                                    
                                                        R                R                R                R               R   
December 31, 2018                                                                                                              
Trade and other receivables                                                                                                    
(excluding non-financial assets)               42 106 115                -                -                -      42 106 115   
Investments in financial assets                         -          194 484                -                -         194 484   
Cash (excluding restricted cash)                5 231 958                -                -                -       5 231 958   
Investec borrowings                                     -                -                -    (100 982 963)   (100 982 963)   
RCF loan facilities                                     -                -      (3 132 577)    (381 087 383)   (384 219 961)   
Warrant liability                                                                   (7 825)                                    
Trade and other payables                                                                                                       
(excluding non-financial liabilities)                   -                -                -     (91 578 960)    (91 578 960)   
  
Financial instruments                           Loans and       Fair value   Liabilities at            Other           Total   
                                              receivables   through profit       fair value   liabilities at                   
                                                                   or loss   through profit   amortized cost                   
                                                                                    or loss                                    
                                                        R                R                R                R               R
December 31, 2017                                                                                                           
Trade and other receivables                                                                                                 
(excluding non-financial assets)              112 874 844                -                -                -     112 874 844   
Investments in financial assets                         -          181 465                -                -         181 465   
Cash (excluding restricted cash)               21 428 994                -                -                -      21 428 994   
Non-interest bearing receivables                2 015 578                -                -                -       2 015 578   
Investec borrowings                                     -                -                -    (187 955 977)   (187 955 977)   
RCF loan facilities                                     -                -         (28 289)    (314 762 527)   (314 790 816) 
Warrant liability                                       -                -         (29 507)                -               -
Trade and other payables                                                                                                       
(excluding non-financial liabilities)                   -                -                -    (152 217 953)   (152 217 953)   


27   CASH GENERATED FROM OPERATIONS                                                                        
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
(Loss) before income tax                                                                    (68 326 104)       (122 581 445)   
Adjusted for:                                                                                                                  
Depreciation and amortization                                                                 22 296 690          65 726 728   
Impairment of property, plant and equipment                                                   67 490 402         175 624 399   
Unrealized foreign exchange (gain)/loss-net                                                   57 954 718        (34 702 467)   
Movement in provision for impairment of receivables                                            3 683 928           (482 509)   
Net (profit) on disposal of property, plant and equipment                                    (2 354 880)           (452 436)   
Fair value adjustment on investments in financial assets                                     (2 949 884)         (5 739 045)   
Fair value adjustment on conversion option and warrant liability                               (934 649)        (32 027 824)   
Movement in asset retirement obligation provision                                                552 641             996 951   
Stock-based compensation                                                                     (3 242 503)           4 380 969   
Penalties                                                                                        314 972                   -   
Investment in financial assets commission deducted from funds                                  1 260 014           1 260 016   
Finance income - cash                                                                        (2 434 622)         (2 077 824)   
Finance cost - cash                                                                           25 854 386          23 962 072   
Finance cost - non-cash                                                                       31 161 989          30 471 996   
Net changes in working capital                                                              (13 520 387)        (46 349 748)   
Cash generated from operations                                                               116 806 711          58 009 833   

28     RELATED PARTIES

The Company has entered into the following transactions in the ordinary course of business with related parties:

                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Payments for services rendered                                                                                                 
RCF (1)                                                                                                -             525 133   
Total                                                                                                  -             525 133   

The following balances were outstanding at the end of the reporting period:

                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Related party payables                                                                                                         
RCF (1)                                                                                        4 845 820           3 279 545   
Total                                                                                          4 845 820           3 279 545   

These amounts are unsecured and non-interest bearing with no fixed terms of repayment.

(1) RCF is a related party to the Company as a result of owning a controlling investment in the Company. As set out in
    the third amended and restated convertible loan agreement with RCF, RCF has invoiced the Company for costs
    incurred relating to the loan facilities, which are disclosed above. In addition to these costs. Included in payables are
    accrued interest payable to RCF of R3.1 million (December 31, 2017: R1.7 million) on the RCF Convertible loan (Refer
    to Note 22) as well as costs invoiced by RCF to the Company in previous years that have not been settled.

Compensation of key management personnel

In accordance with IAS 24 - Related-Party Disclosures, key management personnel are those persons having
authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly,
including any directors (executive and non-executive) of the Company.

The remuneration of directors and other members of key management personnel (officers) during the period was as
follows:

                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Short-term benefits                                                                           10 479 864          11 869 627   
Share-based payments                                                                               1 335              40 839   
Total                                                                                         10 481 199          11 910 466   

No share options were granted to employees during the years ended December 31, 2018 and December 31, 2017
(See also Note 29).

Amounts owing to directors and other key management personnel were R0.4 million as of December 31, 2018
(December 31, 2017: R0.9 million). These amounts relate to director fees which are due and payable during January,
2019.

29    COMMITMENTS AND CONTINGENCIES

Management Contracts

Certain management contracts require that payments of approximately R3.9 million be made upon the occurrence
of a change of control, other than a change of control attributable to RCF and/or Investec. As no triggering event has
taken place, no provision has been recognised as of December 31, 2018.

Capital Commitments

Capital expenditures contracted for at the statement of financial position date but not recognized in the
consolidated financial statements are as follows:
                                          
                                                                                       December 31, 2018   December 31, 2017   
                                                                                                       R                   R   
Property, plant and equipment                                                                  5 219 959           7 252 129   

In terms of Regulation 8.10 of the Mine Health and Safety Act, 29 of 1996 Regulations, the Company is required to
take reasonably practicable measures to ensure that pedestrians are prevented from being injured as a result of
collisions between trackless mobile machines and pedestrians, by way of the installation of proximity devices on
specified machines. During 2017 the Company commenced the phase in of such devices over a two-and-a-half-year
period.

Avemore Trust settlement

On April 20, 2015, the trustees of the Avemore Trust brought an application in the High Court of South Africa against,
among others, the South African Minister of Mineral Resources ("the Minister"), BC Dundee and Zinoju in respect of
Mining Right 174 ("MR174"). In terms of the application, the trustees of the Avemore Trust challenged the decision
by the Minister, subsequent to an internal appeal process concluded during September 2014, to grant a converted
mining right to BC Dundee and to grant consent for the cession of the converted mining right to Zinoju. Settlement
was reached between the parties on May 25, 2017, and the application was withdrawn by the Avemore Trust.

On August 27, 2015, notice was received from the Minister that Mining Right 301 ("MR301") had been withdrawn
together with the approval by the Regional Manager of the Environmental Management Plan in respect of MR301
(the "Ministerial Decision"). The reasons given by the Minister for the Ministerial Decision are procedural issues in
respect of the award process, in relation to an objection received from Avemore Trust in October 2013 against the
awarding of the right. On September 15, 2015, an urgent court order was granted, pending final determination, for
the Ministerial Decision to be of no force and effect, to interdict the Minister from awarding MR301 to any other
party and for the Company to continue to mine in terms of MR301. A review application was instituted by the
Company in October 2015 to obtain final relief in the form of an order setting aside the Ministerial Decision. On
March 23, 2016, Avemore Trust filed a counter application for the Ministerial Decision to be remitted for
consideration by the Minister. Settlement was reached between the parties on May 25, 2017, and the application
was withdrawn by the Avemore Trust.

Settlement with the Avemore Trust was reached on the following terms:
    - R2.0 million on settlement of historic issues as well as an additional R280 thousand (being VAT on the
      amount of R2.0 million).
    - 17.5k litres of water to be stored to allow the continued use of the borehole on the property.
    - R2.50/tonne royalty on future production, subject to a minimum monthly amount of R25 000 per month.

The Company has complied and/or is complying with these terms.

Environmental and Regulatory Contingency

The Company's mining and exploration activities are subject to various laws and regulations governing the
environment and mine operations. These laws and regulations are continually changing and generally becoming
more restrictive.

The previously operational adit at Magdalena does not have an amended Environmental Management Program
("EMP") or an amended Integrated Water Use License Application ("IWULA"). As a result, the mine had to apply for a
Section 24G retrospective Environmental Impact Analysis ("EIA"). R2.45 million had been provided for during
December 2017 to settle potential penalties for the non-compliance. The mine has not yet been issued with any
penalties in this regard. Accordingly, the full amount has been included in Provisions (Trade and other payables) as at
December 31, 2018.

The Company's Calcine plant has been operating without an Air Emissions License ("AEL"), and this has necessitated
that a Section 24G application be submitted to the Economic Development, Tourism and Environmental Affairs
("EDTEA").

The Section 24G application relates to the commencement of certain listed activities which have commenced at the
Calcine plant at Coalfields, prior to obtaining Environmental Authorization ("EA"). To comply with legislation, a full
scoping and EIA report should be undertaken. With the aim to continually strive to be compliant with the operations
of the Calcine plant, the Company approached the EDTEA for an AEL. Once the plant has been refurbished it was
agreed with the EDTEA that stack tests will be carried out and the results submitted. Once the results are submitted,
the EDTEA will issue a fine, and once paid, the EA will be issued. On approval of the EA, an AEL can then be obtained
in compliance with the Air Quality Act. An additional R2.0 million had been provided for during the year ended
December 31, 2018 to settle estimated fines for non-compliance. The mine has not yet been issued with any fines in
this regard. Accordingly, this amount has been included in provisions (Trade and other payables) as at December 31,
2018.

The Company is currently undertaking specialist studies to complete these environmental applications. The
Company has made, and expects to make in the future, expenditures to comply with environmental laws and
regulations.

30      SUBSEQUENT EVENTS

Amendment to Investec Term Loan and Revolving Credit Facility Agreement

On March 5, 2019, the Company accepted and agreed to Investec's amendment to the Term Loan and Revolving
Credit Facility Agreement. Pursuant to the amended agreement, the final maturity date has been extended from
December 31, 2019 to September 30, 2020, with revised quarterly repayment instalments of R25.5 million at the end
of June 2019, R20 million at the end of September 2019 and December 2019, R10 million at the end of March 2020,
and R15 million at the end of June 2020 and September 2020. The Corporation is obliged to pay any accrued
royalties payable to Investec at the end of September 2020 (R5.6 million as at December 31, 2018). In addition,
Investec agreed not to exercise its acceleration rights with respect to any existing events of default under the 
Investec Facility until June 30, 2019.

Resignation of CEO

On February 11, 2019, the chief executive officer ("CEO") at the time resigned from the Company. The board of
directors of Buffalo Coal is in the process of identifying and appointing a successor. As an interim measure, the Board
has taken the decision to appoint the Company's current chief financial officer ("CFO") as interim CEO from February
11, 2019 until a new CEO is appointed.

Other Matters

Except for the matters discussed above and specifically under Note 2.1, Basis of preparation and going concern, no
other matters which management believes are material to the financial affairs of the Company have occurred
between the statement of financial position date and the date of approval of the Annual Results.

April 25, 2019

Sponsor: Questco Corporate Advisory Proprietary Limited



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