CONSOLIDATED FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2011
(Unaudited)
(Expressed in thousands of Canadian Dollars, unless otherwise stated)
1
GREAT BASIN GOLD LTD. |
Consolidated Statement of Loss |
(Expressed in thousands of Canadian dollars, except per share data - unaudited) |
Three months ended | Nine months ended | ||||||||||||||
September 30 | September 30 | ||||||||||||||
Note | 2011 | 2010 | 2011 | 2010 | |||||||||||
$ '000 | $ '000 | $ '000 | $ '000 | ||||||||||||
Revenue | $ | 46,673 | 12,230 | 129,754 | 56,992 | ||||||||||
Cost of operations | |||||||||||||||
Production cost | (30,553 | ) | (14,931 | ) | (74,733 | ) | (43,818 | ) | |||||||
Depletion charge | (1,407 | ) | (1,071 | ) | (4,397 | ) | (4,612 | ) | |||||||
Depreciation charge | (5,030 | ) | (609 | ) | (12,228 | ) | (1,845 | ) | |||||||
Expenses | |||||||||||||||
Exploration expenses | (1,260 | ) | (3,161 | ) | (7,604 | ) | (8,076 | ) | |||||||
Pre-development expenses | (6,287 | ) | (3,653 | ) | (13,712 | ) | (10,338 | ) | |||||||
Corporate and administrative cost | (1,966 | ) | (2,074 | ) | (6,186 | ) | (5,478 | ) | |||||||
Environmental impact study | (722 | ) | (763 | ) | (1,647 | ) | (2,002 | ) | |||||||
Foreign exchange (loss) gain - net | (5,105 | ) | 921 | (1,928 | ) | (450 | ) | ||||||||
Salaries and compensation | |||||||||||||||
Salaries and wages | (1,918 | ) | (2,146 | ) | (6,428 | ) | (5,333 | ) | |||||||
Share based payments expense | 8(b) | (1,013 | ) | (1,123 | ) | (4,028 | ) | (3,831 | ) | ||||||
Loss from operating activities | (8,588 | ) | (16,380 | ) | (3,137 | ) | (28,791 | ) | |||||||
Net interest (expense) income | (5,584 | ) | 312 | (15,988 | ) | 1,325 | |||||||||
Net realized (loss) gain on financial instruments | (134 | ) | – | (134 | ) | 422 | |||||||||
Loss on disposal of mineral property investment | – | – | (232 | ) | – | ||||||||||
Loss on settlement of senior secured notes | 6(c) | – | – | (8,817 | ) | – | |||||||||
Net unrealized loss on financial instruments recognized | 7 | (10 | ) | (3,606 | ) | (7,219 | ) | (3,606 | ) | ||||||
Net unrealized marked-to-market adjustments on financial instruments | 7 | (19,670 | ) | (3,699 | ) | (19,849 | ) | (3,699 | ) | ||||||
Loss before income tax | (33,986 | ) | (23,373 | ) | (55,376 | ) | (34,349 | ) | |||||||
Income tax | (1 | ) | 36 | (3 | ) | 23 | |||||||||
Loss for the period | $ | (33,987 | ) | (23,337 | ) | (55,379 | ) | (34,326 | ) | ||||||
Basic and diluted loss per share | $ | (0.07 | ) | (0.07 | ) | (0.12 | ) | (0.10 | ) | ||||||
Weighted average number of common shares outstanding (thousands) | 473,856 | 351,739 | 453,501 | 343,135 |
The accompanying notes are an integral part of these consolidated interim financial statements
2
GREAT BASIN GOLD LTD. |
Consolidated Statement of Comprehensive Loss |
(Expressed in thousands of Canadian dollars - unaudited) |
Three months ended | Nine months ended | |||||||||||
September 30 | September 30 | |||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||
$ '000 | $ '000 | $ '000 | $ '000 | |||||||||
Loss for the period | $ | (33,987 | ) | $ | (23,337 | ) | $ | (55,379 | ) | (34,326 | ) | |
Other comprehensive loss | ||||||||||||
Changes in fair value of financial instruments | – | – | – | 603 | ||||||||
Realized gain on available-for-sale financial instruments upon transfer | – | – | – | (1,530 | ) | |||||||
Cumulative translation adjustment | (56,401 | ) | 20,166 | (86,357 | ) | 17,999 | ||||||
Other comprehensive (loss) profit for the period | $ | (56,401 | ) | $ | 20,166 | $ | (86,357 | ) | 17,072 | |||
Comprehensive loss for the period | $ | (90,388 | ) | $ | (3,171 | ) | $ | (141,736 | ) | (17,254 | ) |
3
GREAT BASIN GOLD LTD. |
Consolidated Statement of Financial Position |
(Expressed in thousands of Canadian dollars - unaudited) |
September 30 | December 31 | ||||||||
Note | 2011 | 2010 | |||||||
$ '000 | $ '000 | ||||||||
Assets | |||||||||
Current assets | |||||||||
Cash and cash equivalents | 6,522 | 12,855 | |||||||
Trade and other receivables | 8,778 | 9,340 | |||||||
Inventories | 4 | 28,669 | 18,440 | ||||||
Other current assets | 2,294 | 1,283 | |||||||
46,263 | 41,918 | ||||||||
Non-current assets | |||||||||
Loan due from related party | 13,466 | 13,372 | |||||||
Property, plant and equipment | 5 | 710,371 | 695,374 | ||||||
Other assets | 5,197 | 4,719 | |||||||
Total assets | 775,297 | 755,383 | |||||||
Liabilities | |||||||||
Current liabilities | |||||||||
Trade payables and accrued liabilities | 49,407 | 61,731 | |||||||
Current portion of long-term debt | 6 | 45,532 | 53,516 | ||||||
Current portion of other liabilities | 7 | 5,324 | 278 | ||||||
100,263 | 115,525 | ||||||||
Non-current liabilities | |||||||||
Long-term debt | 6 | 187,208 | 156,062 | ||||||
Other liabilities | 7 | 36,556 | 12,419 | ||||||
Site reclamation obligations | 5,456 | 5,660 | |||||||
Total liabilities | 329,483 | 289,666 | |||||||
Equity | |||||||||
Share capital | 833,468 | 709,449 | |||||||
Warrants | 55 | 6,108 | |||||||
Contributed surplus | 81,543 | 77,676 | |||||||
Accumulated other comprehensive (loss) income | (59,962 | ) | 26,395 | ||||||
Deficit | (409,290 | ) | (353,911 | ) | |||||
445,814 | 465,717 | ||||||||
Total liabilities and equity | 775,297 | 755,383 | |||||||
Segment disclosure | 10 |
The accompanying notes are an integral part of these consolidated interim financial statements
Approved by the Board of Directors
/s/ Ferdinand Dippenaar | /s/ Ronald W. Thiessen |
Ferdinand Dippenaar | Ronald W. Thiessen |
Chief Executive Officer | Director |
4
GREAT BASIN GOLD LTD. |
Consolidated Statements of Changes in Equity |
(Expressed in thousands of Canadian dollars - unaudited) |
Accumulated | ||||||||||||||||||||||||
other | ||||||||||||||||||||||||
Share capital | Warrants | Contributed | comprehensive | |||||||||||||||||||||
Common shares | Amount | Warrants | Amount | surplus | income (loss) | Deficit | Total | |||||||||||||||||
(thousands) | $'000 | (thousands) | $'000 | $'000 | $'000 | $'000 | $'000 | |||||||||||||||||
Balance - January 1, 2011 | 414,015 | 709,449 | 24,918 | 6,108 | 77,676 | 26,395 | (353,911 | ) | 465,717 | |||||||||||||||
Net loss for the period | - | - | - | - | - | - | (55,379 | ) | (55,379 | ) | ||||||||||||||
Other comprehensive loss | - | - | - | - | - | (86,357 | ) | - | (86,357 | ) | ||||||||||||||
Comprehensive loss for the period | - | - | - | - | - | (86,357 | ) | (55,379 | ) | (141,736 | ) | |||||||||||||
Employee stock options | ||||||||||||||||||||||||
Value of services recognized (note 8(b)) | - | - | - | - | 6,599 | - | - | 6,599 | ||||||||||||||||
Proceeds on issuing shares | 3,010 | 7,288 | - | - | (2,732 | ) | - | - | 4,556 | |||||||||||||||
Warrants | ||||||||||||||||||||||||
Proceeds on issuing shares (note 8(d)) | 24,694 | 35,393 | (24,694 | ) | (6,053 | ) | - | - | - | 29,340 | ||||||||||||||
Proceeds on issuance of shares for public offering net of issue cost (note 8(c)) | 33,827 | 81,175 | - | - | - | - | - | 81,175 | ||||||||||||||||
Other | 100 | 163 | - | - | - | - | - | 163 | ||||||||||||||||
Balance - September 30, 2011 | 475,646 | 833,468 | 224 | 55 | 81,543 | (59,962 | ) | (409,290 | ) | 445,814 | ||||||||||||||
Balance - January 1, 2010 | 334,158 | 567,596 | 86,179 | 13,104 | 74,403 | 927 | (326,770 | ) | 329,260 | |||||||||||||||
Net loss for the period | - | - | - | - | - | - | (34,326 | ) | (34,326 | ) | ||||||||||||||
Other comprehensive income | - | - | - | - | - | 17,072 | - | 17,072 | ||||||||||||||||
Comprehensive income (loss) for the period | - | - | - | - | - | 17,072 | (34,326 | ) | (17,254 | ) | ||||||||||||||
Employee stock options | ||||||||||||||||||||||||
Value of services recognized (note 8(b)) | - | - | - | - | 5,696 | - | - | 5,696 | ||||||||||||||||
Proceeds on issuing shares | 2,058 | 4,462 | - | - | (1,498 | ) | - | - | 2,964 | |||||||||||||||
Warrants | ||||||||||||||||||||||||
Proceeds on issuing shares | 19,237 | 32,555 | (19,237 | ) | (1,776 | ) | - | - | - | 30,779 | ||||||||||||||
Shares issued for early settlement of senior secured notes | 2,234 | 3,910 | - | - | - | - | - | 3,910 | ||||||||||||||||
Shares issued for mineral properties | 10,574 | 19,243 | - | - | - | - | - | 19,243 | ||||||||||||||||
Balance - September 30, 2010 | 368,261 | 627,766 | 66,942 | 11,328 | 78,601 | 17,999 | (361,096 | ) | 374,598 |
The accompanying notes are an integral part of these consolidated interim financial statements.
5
GREAT BASIN GOLD LTD.
Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian dollars - unaudited)
Three months ended | Nine months ended | |||||||||||
September 30 | September 30 | |||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||
$ '000 | $ '000 | $ '000 | $ '000 | |||||||||
Operating activities | ||||||||||||
Loss for the period | $ | (33,987 | ) | $ | (23,337 | ) | $ | (55,379 | ) | $ | (34,326 | ) |
Items not involving cash | ||||||||||||
Production non-cash charges | 1,111 | 142 | 2,078 | 141 | ||||||||
Pre-development non-cash charges | 290 | 265 | 665 | 788 | ||||||||
Exploration non-cash charges | 30 | 87 | 121 | 223 | ||||||||
Depreciation | 5,198 | 660 | 12,752 | 2,003 | ||||||||
Share donation | – | – | 163 | – | ||||||||
Net realized profit on financial instruments | – | – | – | (422 | ) | |||||||
Unrealized profit on financial instruments | (19 | ) | (77 | ) | (3 | ) | (43 | ) | ||||
Unrealized loss on financial instruments recognized | 10 | 3,606 | 7,219 | 3,606 | ||||||||
Unrealized marked-to-market adjustments on financial instruments | 19,670 | 3,699 | 19,849 | 3,699 | ||||||||
Share based payments expense | 1,013 | 1,123 | 4,028 | 3,831 | ||||||||
Unrealized foreign exchange loss (gain) | 6,139 | (936 | ) | 2,881 | (1,489 | ) | ||||||
Depletion | 1,407 | 1,071 | 4,397 | 4,612 | ||||||||
Interest expense | 5,980 | 235 | 17,177 | 302 | ||||||||
Interest income | (396 | ) | (298 | ) | (1,189 | ) | (1,378 | ) | ||||
Loss on settlement of senior secured notes | – | – | 8,817 | – | ||||||||
Changes in non-cash operating working capital | ||||||||||||
Trade and other receivables | 216 | 11,148 | (362 | ) | (3,037 | ) | ||||||
Other current assets | (1,649 | ) | (489 | ) | (1,068 | ) | (1,070 | ) | ||||
Inventories | (1,522 | ) | 589 | (9,232 | ) | 2,571 | ||||||
Trade payables and accrued liabilities | 6,793 | 3,105 | 11,643 | 7,574 | ||||||||
Net cash generated from (utilized by) operating activities | 10,284 | 593 | 24,557 | (12,415 | ) | |||||||
Investing activities | ||||||||||||
Advance to related party | – | – | (1,468 | ) | – | |||||||
Net proceeds on sale of financial instruments | – | – | – | 3,527 | ||||||||
Purchase of property, plant and equipment | (36,630 | ) | (69,978 | ) | (129,821 | ) | (146,039 | ) | ||||
Additions to restricted cash | – | – | – | (5,882 | ) | |||||||
Interest income | 138 | 27 | 460 | 1,060 | ||||||||
Reclamation deposits | (252 | ) | (150 | ) | (712 | ) | (52 | ) | ||||
Net cash utilized by investing activities | (36,744 | ) | (70,101 | ) | (131,541 | ) | (147,386 | ) | ||||
Financing activities | ||||||||||||
Common shares and warrants issued for cash, net of issue costs | 12,615 | 30,023 | 115,070 | 31,377 | ||||||||
Proceeds on issuance of debt | – | 24,553 | 68,810 | 72,401 | ||||||||
Repayment of debt | (15,968 | ) | (621 | ) | (71,723 | ) | (5,852 | ) | ||||
Interest expense | (1,516 | ) | – | (10,556 | ) | (5,453 | ) | |||||
Net cash (utilized by) generated from financing activities | (4,869 | ) | 53,955 | 101,601 | 92,473 | |||||||
Decrease in cash and cash equivalents | (31,329 | ) | (15,553 | ) | (5,383 | ) | (67,328 | ) | ||||
Cash and cash equivalents, beginning of period | 38,771 | 39,556 | 12,855 | 89,464 | ||||||||
Foreign exchange movement on cash and cash equivalents | (920 | ) | (914 | ) | (950 | ) | 953 | |||||
Cash and cash equivalents, end of period | $ | 6,522 | $ | 23,089 | $ | 6,522 | $ | 23,089 |
Refer note 9 of the notes to the consolidated interim financial statements for supplementary information to the cash flow statement.
6
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and nine months ended September 30, 2011 and 2010 |
(Expressed in thousands of Canadian dollars - unaudited) |
1. | General information |
Great Basin Gold Ltd. (“Great Basin” or the “Company”) is incorporated under the laws of the Province of British Columbia and its registered address is 1108-1030 West Georgia Street, Vancouver BC, Canada. The Company is a mineral exploration and development company that is currently focused on delivering two advanced stage projects: the Hollister Project on the Carlin Trend in Nevada, USA and the Burnstone Project in the Witwatersrand Goldfields in South Africa. The Company, currently recognized as an emerging producer, will migrate to the rank of a junior gold producer as production from these two projects increases during 2011 and 2012. Over and above the exploration being conducted at the above mentioned properties, greenfields exploration is being undertaken in Tanzania and Mozambique. | |
Operating results for the three and nine month periods ended September 30, 2011 are not necessarily indicative of the results that may be expected for the full fiscal year ending December 31, 2011. In the opinion of management, these unaudited interim consolidated financial statements reflect all adjustments that are necessary for a fair presentation of the results for the interim period presented. | |
2. | Basis of preparation and adoption of IFRS |
The Company prepares its financial statements in accordance with Canadian Generally Accepted Accounting Principles (“GAAP”) as set out in the Handbook of the Canadian Institute of Chartered Accountants (“CICA Handbook”). In 2010, the CICA Handbook was revised to incorporate International Financial Reporting Standards (“IFRS”) and requires publicly accountable enterprises to apply such standards effective for years beginning on or after January 1, 2011. Accordingly, the Company commenced reporting on this basis in its 2011 interim consolidated financial statements. In these financial statements, the term “Canadian GAAP” refers to Canadian GAAP before the adoption of IFRS. | |
These interim consolidated financial statements have been prepared in accordance with IFRS applicable to the preparation of interim financial statements, including IAS34,Interim Financial Reporting, and IFRS 1,First-time Adoption of International Financial Reporting Standards. The accounting policies followed in these interim financial statements are the same as those applied in the Company’s interim financial statements for the period ended March 31, 2011. The Company has consistently applied the same accounting policies throughout all periods presented, as if these policies had always been in effect. Note 11 discloses the impact of the transition to IFRS on the Company’s reported equity as at September 30, 2010 and comprehensive loss for the three and nine months ended September 30, 2010. | |
The accounting policies applied in these interim consolidated financial statements are based on IFRS effective for the year ending December 31, 2011, as issued and outstanding as of November 10, 2011, the date the Board of Directors approved the statements. Any subsequent changes to IFRS that are given effect in the Company’s annual consolidated financial statements for the year ending December 31, 2011 could result in restatement of these interim consolidated financial statements, including the transition adjustments recognized on change-over to IFRS. |
7
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and nine months ended September 30, 2011 and 2010 |
(Expressed in thousands of Canadian dollars - unaudited) |
2. | Basis of preparation and adoption of IFRS (continued) |
The interim consolidated financial statements should be read in conjunction with the Company’s Canadian GAAP annual financial statements for the year ended December 31, 2010, and the Company’s interim financial statements for the quarter ended March 31, 2011 prepared in accordance with IFRS applicable to interim financial statements, which are both available through the internet on SEDAR at www.sedar.com. | |
3. | Significant accounting policies, judgments and estimation uncertainty |
Significant accounting policies | |
These unaudited interim consolidated financial statements follow the same accounting policies and methods of application as the Company’s most recent annual financial statements, except for those changes recognized on change-over to IFRS, as described in note 11 of the Company’s interim financial statements for the quarter ended March 31, 2011. | |
Critical accounting estimates and judgments | |
The Company makes estimates and assumptions concerning the future that will, by definition, seldom equal actual results. These estimates and judgments have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. | |
Significant areas requiring the use of management estimates relate to impairment of mineral property interests, valuation of inventories, allocation of purchase price consideration to the fair value of identifiable assets and liabilities acquired, the determination of amortization, depletion and accretion, determination of reclamation obligations, the determination of the fair values of financial instruments, assumptions used in determining the fair value of non-cash share based payments, warrants and derivatives, determination of valuation allowances for deferred income tax liabilities, estimated market related interest rate used to calculate the equity component of compound financial instruments and allocation of indirect mining and overhead expenses to production and development costs. | |
4. | Inventories |
September 30 | December 31 | ||||||
2011 | 2010 | ||||||
$‘000 | $‘000 | ||||||
Stores and materials | 5,489 | 3,534 | |||||
Unprocessed ore | 4,792 | 3,220 | |||||
Precious metals in process | 18,388 | 11,686 | |||||
28,669 | 18,440 |
Cost of operations recognized in the statement of income consists of direct and indirect mining costs, overhead costs, royalties, depreciation of mining equipment and depletion of mineral properties. During the three and nine months ended September 30, 2011, stores and materials, unprocessed ore and precious metal in process of $37 million (2010: $16.6 million) and $91.4 million (2010: $50.3 million) have been included under cost of operations respectively.
8
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and nine months ended September 30, 2011 and 2010 |
(Expressed in thousands of Canadian dollars - unaudited) |
5. | Property, plant and equipment |
Mineral | |||||||||||||||||||
Mineral | properties | Mine | |||||||||||||||||
properties | not | infrastructure | |||||||||||||||||
subject to | subject to | and | Leased | Other | |||||||||||||||
depletion | depletion | equipment | assets | assets | Total | ||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | ||||||||||||||
Nine months ended September 30, 2011 | |||||||||||||||||||
Opening net book value | 134,582 | 48,410 | 499,654 | 9,039 | 3,689 | 695,374 | |||||||||||||
Additions | - | - | 115,137 | 2,061 | 1,120 | 118,318 | |||||||||||||
Transferred | - | - | 1,957 | (1,957 | ) | - | - | ||||||||||||
Depletion and depreciation | (4,267 | ) | - | (14,660 | ) | (1,337 | ) | (1,253 | ) | (21,517 | ) | ||||||||
Foreign exchange differences | (9,467 | ) | 166 | (71,260 | ) | (879 | ) | (364 | ) | (81,804 | ) | ||||||||
Closing net book value | 120,848 | 48,576 | 530,828 | 6,927 | 3,192 | 710,371 | |||||||||||||
At September 30, 2011: | |||||||||||||||||||
Cost | 140,889 | 48,576 | 562,323 | 8,899 | 6,866 | 767,553 | |||||||||||||
Accumulated depreciation | (20,041 | ) | - | (31,495 | ) | (1,972 | ) | (3,674 | ) | (57,182 | ) | ||||||||
Net book value | 120,848 | 48,576 | 530,828 | 6,927 | 3,192 | 710,371 | |||||||||||||
Year ended December 31, 2010 | |||||||||||||||||||
Opening net book value | 138,624 | 29,183 | 187,325 | 2,153 | 1,996 | 359,281 | |||||||||||||
Additions | - | 19,399 | 293,739 | 7,317 | 2,095 | 322,550 | |||||||||||||
Depletion and depreciation | (6,158 | ) | - | (9,278 | ) | (819 | ) | (553 | ) | (16,808 | ) | ||||||||
Foreign exchange differences | 2,116 | (172 | ) | 27,868 | 388 | 151 | 30,351 | ||||||||||||
Closing net book value | 134,582 | 48,410 | 499,654 | 9,039 | 3,689 | 695,374 | |||||||||||||
At December 31, 2010: | |||||||||||||||||||
Cost | 149,313 | 48,410 | 518,210 | 10,250 | 6,351 | 732,534 | |||||||||||||
Accumulated depreciation | (14,731 | ) | - | (18,556 | ) | (1,211 | ) | (2,662 | ) | (37,160 | ) | ||||||||
Net book value | 134,582 | 48,410 | 499,654 | 9,039 | 3,689 | 695,374 |
Assets under construction of $34.9 million included under mine infrastructure and equipment is not being amortized as at September 30, 2011 (December 31, 2010, $435.3 million).
Leased assets are pledged as security for the related finance leases (refer note 6). Mineral properties of $124 million consisting of the Hollister and Burnstone properties and fixed assets of $534 million have been pledged as security for the term loans (refer note 6(a) and (b)).
9
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and nine months ended September 30, 2011 and 2010 |
(Expressed in thousands of Canadian dollars - unaudited) |
6. | Long-term debt |
Non-current portion of long-term debt | |||||||
September 30 | December 31 | ||||||
2011 | 2010 | ||||||
$‘000 | $‘000 | ||||||
Convertible debentures | 95,827 | 91,677 | |||||
Finance lease liabilities | 83 | 436 | |||||
Term loan I (note 6(a)) | 45,944 | 63,949 | |||||
Term loan II (note 6(b)) | 45,354 | - | |||||
187,208 | 156,062 |
Current portion of long-term debt | |||||||
September 30 | December 31 | ||||||
2011 | 2010 | ||||||
$‘000 | $‘000 | ||||||
Convertible debentures | 3,373 | - | |||||
Finance lease liabilities | 4,178 | 6,955 | |||||
Senior secured notes (note 6(c)) | - | 40,101 | |||||
Term loan I (note 6(a)) | 21,124 | 6,460 | |||||
Term loan II (note 6(b)) | 16,857 | - | |||||
45,532 | 53,516 |
The continuity of long-term debt is as follows: | |||||||
September 30 | December 31 | ||||||
2011 | 2010 | ||||||
$‘000 | $‘000 | ||||||
Opening balance at January 1 | 209,578 | 130,716 | |||||
New debt (note 6(b)) | 68,810 | 75,942 | |||||
New leases | 2,034 | 7,261 | |||||
Transaction cost (note 6(b)) | (2,210 | ) | (3,707 | ) | |||
Repayment of debt and interest | (80,138 | ) | (25,092 | ) | |||
Settlement loss on senior secured notes (note 6(c)) | 8,817 | - | |||||
Amortized transaction cost | 878 | 505 | |||||
Interest expense | 19,091 | 30,406 | |||||
Foreign exchange | 5,880 | (6,453 | ) | ||||
232,740 | 209,578 |
(a) Term loan I
Term loan I has a maximum term of 4 years from date of first draw down and will be repaid in 13 quarterly consecutive installments. The first installment was settled on May 26, 2011, 12 months after initial draw down. The interest rate for Term loan I is linked to the USD London interbank offered rate (“USD LIBOR”) at a premium of 4% above USD LIBOR and is fixed on a quarterly basis. The floating rate on September 30, 2011 is 4.314% (USD LIBOR of 0.314% plus 4% premium).
10
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and nine months ended September 30, 2011 and 2010 |
(Expressed in thousands of Canadian dollars - unaudited) |
6. | Long-term debt (continued) | |
(a) | Term loan I (continued) | |
The Burnstone Property, its assets and certain subsidiary guarantees serve as security for the loan. Term loan I contains certain financial covenants customary to facilities of this nature and includes borrower tangible net worth, debt to equity ratio, debt service cover ratio and a loan life cover ratio. As at September 30, 2011, the Company assessed and complied with all covenants. | ||
Refer to note 7(a) for details of the hedge structure entered into under the Term loan I agreement. | ||
(b) | Term loan II | |
The Company closed a $69 million (US$70 million) term loan with Credit Suisse AG in March 2011 (“Term loan II”). | ||
Term loan II has a maximum term of 4 years from date of first draw down and will be repaid in 18 quarterly consecutive installments. The first installment was settled on September 13, 2011, 6 months after initial draw down. The interest rate for Term loan II is linked to the USD LIBOR at a premium of 3.75% above USD LIBOR and is fixed on a quarterly basis. The floating rate on September 30, 2011 is 4.0971% (USD LIBOR of 0.3471% plus 3.75% premium). | ||
The Hollister project and a surety signed by the Company serve as security for the loan. | ||
Term loan II contains certain financial covenants customary to facilities of this nature and includes borrower tangible net worth, debt to equity ratio, debt service cover ratio and a loan life cover ratio. As at September 30, 2011, the Company assessed and complied with all covenants. Refer to note 7(b) for details of the hedge structure entered into under the Term loan II agreement. | ||
(c) | Senior secured notes | |
On March 15, 2011, the Company applied $50.3 million (US$51.4 million) from the Term loan II proceeds towards full and final settlement of the senior secured notes issued in December 2008. The liability was settled at an accounting loss of $8.8 million (US$8.9 million) calculated as the difference between the amortized carrying value and the outstanding debt amount on the date of settlement. | ||
7. | Other liabilities |
Non-current portion of other liabilities | |||||||
September 30 | December 31 | ||||||
2011 | 2010 | ||||||
$‘000 | $‘000 | ||||||
Financial guarantee | 2,227 | 2,597 | |||||
Zero cost collar program I (note 7(a)) | 13,360 | 9,822 | |||||
Zero cost collar program II (note 7(b)) | 20,969 | - | |||||
36,556 | 12,419 |
11
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and nine months ended September 30, 2011 and 2010 |
(Expressed in thousands of Canadian dollars - unaudited) |
7. | Other liabilities (continued) |
Current portion of other liabilities | |||||||
September 30 | December 31 | ||||||
2011 | 2010 | ||||||
$‘000 | $‘000 | ||||||
Zero cost collar program I (note 7(a)) | 4,821 | 278 | |||||
Zero cost collar program II (note 7(b)) | 503 | - | |||||
5,324 | 278 |
The continuity of other liabilities is as follows: | |||||||
September 30 | December 31 | ||||||
2011 | 2010 | ||||||
$‘000 | $‘000 | ||||||
Opening balance at January 1 | 12,697 | - | |||||
Fair value of guarantee | - | 2,597 | |||||
ZCC fair value upon inception (note 7(b)) | 7,219 | 3,606 | |||||
Marked-to-market adjustments – ZCC I | 7,034 | 6,860 | |||||
Marked-to-market adjustments – ZCC II | 12,815 | - | |||||
Foreign exchange | 2,115 | (366 | ) | ||||
41,880 | 12,697 |
(a) Zero cost collar program I
In connection with Term loan I (refer note 6(a)), the Company executed a zero cost collar (“ZCC”) hedge program for a total 105,000 gold ounces over a period of three years that commenced in January 2011.
As of January 1, 2011, the Company is required to deliver 1,250 gold ounces per month over a twelve month period. The remaining 90,000 gold ounces will be delivered in 24 equal monthly deliveries of 3,750 gold ounces, starting January 1, 2012. The program includes put options priced at US$850 and call options priced at US$1,705 per gold oz.
Gold delivery positions as at September 30, 2011: | |||
September 30 | December 31 | ||
2011 | 2010 | ||
Expired unexercised at no cost | 10,000 ounces | Nil ounces | |
Delivered | 1,250 ounces | Nil ounces | |
Remaining positions | 93,750 ounces | 105,000 ounces |
12
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and nine months ended September 30, 2011 and 2010 |
(Expressed in thousands of Canadian dollars - unaudited) |
7. | Other liabilities (continued) |
(a) Zero cost collar program I (continued) | |
Marked-to-market movements were calculated using an option pricing model with inputs based on the following assumptions: |
September 30 | December 31 | ||
2011 | 2010 | ||
Gold price (per ounce) | US$1,623 | US$1,419 | |
Risk free interest rate | 0.27% - 0.55% | 0.25% - 1.34% | |
Expected life | 1 - 27 months | 1 - 36 months | |
Gold price volatility | 37.06% - 32.52% | 17.3% - 27% |
The fair values of the derivative instruments as of September 30, 2011 were as follows: | |||||||||||||
Asset | Liability | Net | |||||||||||
Derivatives | derivatives | Derivatives | |||||||||||
Estimated | Estimated | Estimated | |||||||||||
Derivatives not designated as | Balance sheet | fair value | fair value | fair value | |||||||||
hedging instruments | classification | $‘000 | $‘000 | $‘000 | |||||||||
Commodity contracts (gold) – ZCC 1 | Current other liabilities | 25 | (4,846 | ) | (4,821 | ) | |||||||
Commodity contracts (gold) – ZCC 1 | Other liabilities | 687 | (14,047 | ) | (13,360 | ) |
(b) Zero cost collar program II
In connection with Term loan II (refer note 6(b)), the Company executed a ZCC hedge program for a total 117,500 gold ounces over a period of four years, commencing in January 2012.
The Company will be required to deliver 875 gold ounces per month over a twelve month period followed by 3,000 gold ounces per month over a twenty four month period. The remaining 35,000 gold ounces will be delivered in 12 equal monthly deliveries of 2,916 gold ounces, starting January 30, 2015. The program includes put options priced at US$1,050 and call options priced at US$1,930 per gold oz.
The fair value on inception and subsequent mark-to-market movements were calculated using an option pricing model with inputs based on the following assumptions:
September 30 | March 10 | ||
2011 | 2011 | ||
Gold price (per ounce) | US$1,623 | US$1,410 | |
Risk free interest rate | 0.40% - 0.98% | 0.40% - 1.91% | |
Expected life | 3 - 51 months | 10 - 57 months | |
Gold price volatility | 33.37% - 34.10% | 19.65% - 26.26% |
13
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and nine months ended September 30, 2011 and 2010 |
(Expressed in thousands of Canadian dollars - unaudited) |
7. | Other liabilities (continued) |
(b) Zero cost collar program II (continued) | |
The fair values of the derivative instruments as of September 30, 2011 were as follows: |
Asset | Liability | Net | |||||||||||
Derivatives | derivatives | derivatives | |||||||||||
Estimated | Estimated | Estimated | |||||||||||
Derivatives not designated as | Balance sheet | fair value | fair value | fair value | |||||||||
hedging instruments | classification | $‘000 | $‘000 | $‘000 | |||||||||
Commodity contracts (gold) – ZCC 2 | Current other liabilities | 51 | (554 | ) | (503 | ) | |||||||
Commodity contracts (gold) – ZCC 2 | Other liabilities | 8,758 | (29,727 | ) | (20,969 | ) |
8. | Share capital |
(a) Authorized share capital | |
The Company’s authorized share capital consists of an unlimited number of common shares without par value. | |
(b) Share option plan | |
The continuity of share purchase options is as follows: |
Contractual weighted | ||||
Weighted average | Number of options | average remaining life | ||
exercise price | (thousands) | (years) | ||
Opening total at January 1 | $1.75 | 16,441 | 2.26 | |
Granted | $2.37 | 9,415 | ||
Exercised | $1.54 | (2,655) | ||
Expired | $2.55 | (1,300) | ||
Forfeited | $2.10 | (2,951) | ||
$1.98 | 18,950 | 2.30 |
As at September 30, 2011, 11.3 million of the outstanding options were exercisable at an average exercise price of $1.81 per option and expiry dates ranging between December 12, 2011 and May 5, 2016.
In addition to the options outstanding under the stock option plan noted above, out of plan options to acquire 677,766 shares at an exercise price of $0.60 and expiry date of June 1, 2012, remain outstanding in connection with the acquisition of mineral properties in 2008.
Costs previously recognized on options were, upon forfeiture, reversed through the current year’s profit or loss.
The exercise prices of all share purchase options granted during the three and nine months ended September 30, 2011 and 2010 were at or above the market price at the grant date.
14
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and nine months ended September 30, 2011 and 2010 |
(Expressed in thousands of Canadian dollars - unaudited) |
8. | Share capital (continued) |
(b) Share option plan (continued) | |
Using an option pricing model with the assumptions noted below, the estimated fair value of options granted which have been included in the statement of income for the three and nine months ended September 30, 2011, is as follows: |
Three months ended September 30 | |||||||
2011 | 2010 | ||||||
$‘000 | $‘000 | ||||||
Total compensation cost recognized, credited to contributed surplus | 1,634 | 1,834 | |||||
Compensation cost allocated to development expenses | - | (76 | ) | ||||
Compensation cost allocated to production cost | (621 | ) | (164 | ) | |||
Compensation cost capitalized on Burnstone mine development | - | (465 | ) | ||||
Compensation cost allocated to bonus provision | - | (6 | ) | ||||
Share based payments expense | 1,013 | 1,123 |
Nine months ended September 30 | |||||||
2011 | 2010 | ||||||
$ ‘000 | $‘000 | ||||||
Total compensation cost recognized, credited to contributed surplus | 6,599 | 5,696 | |||||
Compensation cost allocated to development expenses | - | (248 | ) | ||||
Compensation cost allocated to production cost | (2,475 | ) | (529 | ) | |||
Compensation cost capitalized on Burnstone mine development | (96 | ) | (999 | ) | |||
Compensation cost allocated to bonus provision | - | (89 | ) | ||||
Share based payments expense | 4,028 | 3,831 |
The weighted-average assumptions used to estimate the fair value of options granted during the respective periods were as follows:
Three months ended | Nine months ended September 30 | ||||||||||||
September 30 | |||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||
Risk free interest rate | 1.9% | 2% | 2.5% | 2.6% | |||||||||
Expected life | 3 years | 3 years | 3.4 years | 3.4 years | |||||||||
Expected volatility | 80% | 87% | 81% | 85% | |||||||||
Expected dividends | Nil | Nil | Nil | Nil |
(c) Share issuance, February 2011 - Public Offering
The Company completed a public offering on February 23, 2011 whereby it issued 33,827,250 shares at a price of $2.55 per share thereby raising gross proceeds of $86.3 million.
The Company paid the underwriters a fee of $4.3 million and incurred other share issue costs of approximately $0.8 million for net proceeds of $81.2 million which has been recorded as share capital.
(d) Share issuance – Exercised warrants
Warrant holders exercised 24,694,979 of the $1.25 senior secured notes warrants during the nine months ended September 30, 2011.
Each warrant entitled the holder thereof to purchase one common share and the Company accordingly recorded $35.4 million, consisting of proceeds and fair value, as share capital.
15
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and nine months ended September 30, 2011 and 2010 |
(Expressed in thousands of Canadian dollars - unaudited) |
9. | Additional cash flow information |
Supplementary information | |||||||
Three months ended September 30 | |||||||
2011 | 2010 | ||||||
$’000 | $’000 | ||||||
Income taxes paid (recovered) | 1 | (36 | ) | ||||
Non-cash investing activities: | |||||||
Depreciation capitalized to property, plant and machinery (note 5) | 1,101 | 1,770 | |||||
Accrued interest capitalized to property, plant and machinery (note 5) | - | 14,853 | |||||
Share based compensation capitalized (refer note 8(b)) | - | 465 | |||||
Non-cash financing activities: | |||||||
Fair value of stock options transferred to share capital from contributed surplus on options exercised | 1,158 | 937 | |||||
Fair value of warrants transferred to share capital on warrants exercised | 2,260 | 1,776 |
Nine months ended September 30 | |||||||
2011 | 2010 | ||||||
$’000 | $’000 | ||||||
Income taxes paid (recovered) | 3 | (23 | ) | ||||
Non-cash investing activities: | |||||||
Depreciation capitalized to property, plant and machinery (note 5) | 3,419 | 4,437 | |||||
Shares issued for property, plant and equipment | - | 19,243 | |||||
Accrued interest capitalized to property, plant and machinery (note 5) | 2,515 | 24,360 | |||||
Share based compensation capitalized (refer note 8(b)) | 96 | 999 | |||||
Non-cash financing activities: | |||||||
Fair value of stock options transferred to share capital from contributed surplus on options exercised | 2,732 | 1,498 | |||||
Fair value of warrants transferred to share capital on warrants exercised | 6,063 | 1,776 | |||||
Shares issued for early settlement of senior secured notes | - | 3,910 |
10. | Segment disclosure |
The Company operates in reportable operating segments to deliver on its strategy to explore, development and operate mineral properties. Management has determined the operating segments based on the reports reviewed by the Company's Chief Operating Decision Maker ("CODM") that are used to make strategic decisions. The Company's CODM is its Chief Executive Officer. |
16
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and nine months ended September 30, 2011 and 2010 |
(Expressed in thousands of Canadian dollars - unaudited) |
10. | Segment disclosure (continued) |
Assets | |||||||
September 30 | December 31 | ||||||
2011 | 2010 | ||||||
$ ‘000 | $ ‘000 | ||||||
Corporate entities | |||||||
Assets other than mineral property interests | 5,062 | 14,159 | |||||
Tanzanian exploration | |||||||
Assets other than mineral property interests | 339 | 618 | |||||
Mineral property interests | 45,127 | 45,127 | |||||
Nevada operations | |||||||
Assets other than mineral property interests | 28,412 | 21,640 | |||||
Mine development and equipment | 44,101 | 40,508 | |||||
Mineral property interests | 52,476 | 53,742 | |||||
South African operations | |||||||
Assets other than mineral property interests | 32,481 | 25,764 | |||||
Mine development and equipment | 495,478 | 469,702 | |||||
Mineral property interests | 71,821 | 84,123 | |||||
775,297 | 755,383 |
Revenue | |||||||
Three months ended | |||||||
September 30 | |||||||
2011 | 2010 | ||||||
$ ‘000 | $ ‘000 | ||||||
Nevada operations | |||||||
Sale of refined precious metals | 35,754 | 12,230 | |||||
South African operations | |||||||
Sale of refined precious metals | 10,919 | - | |||||
46,673 | 12,230 |
Nine months ended | |||||||
September 30 | |||||||
2011 | 2010 | ||||||
$ ‘000 | $ ‘000 | ||||||
Nevada operations | |||||||
Sale of refined precious metals | 106,949 | 56,992 | |||||
South African operations | |||||||
Sale of refined precious metals | 22,805 | - | |||||
129,754 | 56,992 |
Refined precious metals are sold to RK Mine Finance Trust I under the terms of an off-take agreement.
17
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and nine months ended September 30, 2011 and 2010 |
(Expressed in thousands of Canadian dollars - unaudited) |
11. | Transition to IFRS | |
The effect of the Company’s transition to IFRS, described in note 2, is summarized below. | ||
(a) | Reconciliation of equity and comprehensive loss as previously reported under Canadian GAAP to IFRS |
December 31, 2010 | September 30, 2010 | ||||||||||||||||||||
$'000 | $'000 | $'000 | $'000 | $'000 | $'000 | ||||||||||||||||
Note | Cdn GAAP | Adj | IFRS | Cdn GAAP | Adj | IFRS | |||||||||||||||
Assets | |||||||||||||||||||||
Current assets | |||||||||||||||||||||
Cash and cash equivalents | 12,855 | - | 12,855 | 23,089 | - | 23,089 | |||||||||||||||
Amounts receivable | 9,340 | - | 9,340 | 10,446 | - | 10,446 | |||||||||||||||
Inventory | 18,440 | - | 18,440 | 24,640 | - | 24,640 | |||||||||||||||
Other assets | 1,283 | - | 1,283 | 1,927 | - | 1,927 | |||||||||||||||
41,918 | - | 41,918 | 60,102 | - | 60,102 | ||||||||||||||||
Loans due from related parties | 13,372 | - | 13,372 | - | - | ||||||||||||||||
Property, plant and equipment | 512,384 | - | 512,384 | 418,430 | - | 418,430 | |||||||||||||||
Reclamation deposits | 4,719 | - | 4,719 | 4,632 | - | 4,632 | |||||||||||||||
Restricted cash | - | - | - | 11,950 | - | 11,950 | |||||||||||||||
Mineral property interests | (i) | 245,649 | (62,659 | ) | 182,990 | 246,798 | (62,817 | ) | 183,981 | ||||||||||||
Total Assets | 818,042 | (62,659 | ) | 755,383 | 741,912 | (62,817 | ) | 679,095 | |||||||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||||
Current liabilities | |||||||||||||||||||||
Accounts payable and accrued liabilities | 61,731 | - | 61,731 | 77,995 | - | 77,995 | |||||||||||||||
Current portion of long term borrowings | 53,516 | - | 53,516 | 9,239 | - | 9,239 | |||||||||||||||
Current portion of other liabilities | 278 | - | 278 | 117 | - | 117 | |||||||||||||||
115,525 | - | 115,525 | 87,351 | - | 87,351 | ||||||||||||||||
Long term borrowings | 156,062 | - | 156,062 | 203,383 | - | 203,383 | |||||||||||||||
Future income taxes | (i);(ii) | 18,939 | (18,939 | ) | - | 18,939 | (18,939 | ) | - | ||||||||||||
Other liabilities | 12,419 | - | 12,419 | 9,653 | - | 9,653 | |||||||||||||||
Site reclamation obligations | 5,660 | - | 5,660 | 4,110 | - | 4,110 | |||||||||||||||
193,080 | (18,939 | ) | 174,141 | 236,085 | (18,939 | ) | 217,146 | ||||||||||||||
Shareholders' equity | |||||||||||||||||||||
Share capital | 709,449 | - | 709,449 | 627,766 | - | 627,766 | |||||||||||||||
Warrants | 6,108 | - | 6,108 | 11,328 | - | 11,328 | |||||||||||||||
Contributed surplus | (ii) | 86,540 | (8,864 | ) | 77,676 | 87,465 | (8,864 | ) | 78,601 | ||||||||||||
Deficit | (iv) | (294,625 | ) | (59,286 | ) | (353,911 | ) | (301,346 | ) | (59,750 | ) | (361,096 | ) | ||||||||
Accumulated other comprehensive income (loss) | (iii) | 1,965 | 24,430 | 26,395 | (6,737 | ) | 24,736 | 17,999 | |||||||||||||
509,437 | (43,720 | ) | 465,717 | 418,476 | (43,878 | ) | 374,598 | ||||||||||||||
Total Liabilities and Shareholders' Equity | 818,042 | (62,659 | ) | 755,383 | 741,912 | (62,817 | ) | 679,095 |
18
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and nine months ended September 30, 2011 and 2010 |
(Expressed in thousands of Canadian dollars - unaudited) |
11. | Transition to IFRS (continued) | |
(a) | Reconciliation of equity and comprehensive loss as previously reported under Canadian GAAP to IFRS (continued) |
Three months ended September 30, 2010 | Nine months ended September 30, 2010 | ||||||||||||||||||||
$ '000 | $ '000 | $ '000 | $ '000 | $ '000 | $ '000 | ||||||||||||||||
Note | Cdn GAAP | Adj | IFRS | Cdn GAAP | Adj | IFRS | |||||||||||||||
Revenue | 12,230 | 12,230 | 56,992 | - | 56,992 | ||||||||||||||||
(Expenses) income | |||||||||||||||||||||
Production cost | (15,540 | ) | (15,540 | ) | (45,663 | ) | - | (45,663 | ) | ||||||||||||
Depletion charge | (i) | (1,455 | ) | 384 | (1,071 | ) | (5,919 | ) | 1,307 | (4,612 | ) | ||||||||||
Exploration expenses | (3,161 | ) | (3,161 | ) | (8,076 | ) | - | (8,076 | ) | ||||||||||||
Pre-development expenses | (3,653 | ) | (3,653 | ) | (10,338 | ) | - | (10,338 | ) | ||||||||||||
Corporate and administrative cost | (2,151 | ) | (2,151 | ) | (5,521 | ) | - | (5,521 | ) | ||||||||||||
Environmental impact study | (763 | ) | (763 | ) | (2,002 | ) | - | (2,002 | ) | ||||||||||||
Foreign exchange gain - net | 921 | 921 | (450 | ) | - | (450 | ) | ||||||||||||||
Salaries and compensation | - | - | - | ||||||||||||||||||
Salaries and wages | (2,146 | ) | (2,146 | ) | (5,333 | ) | - | (5,333 | ) | ||||||||||||
Stock-based compensation | (1,123 | ) | (1,123 | ) | (3,831 | ) | - | (3,831 | ) | ||||||||||||
Loss before the undernoted and income taxes | (16,841 | ) | 384 | (16,457 | ) | (30,141 | ) | 1,307 | (28,834 | ) | |||||||||||
Interest expense | (15 | ) | (15 | ) | (82 | ) | - | (82 | ) | ||||||||||||
Interest income | 327 | 327 | 1,407 | - | 1,407 | ||||||||||||||||
Net realized gain on available-for-sale financial instruments | – | – | 489 | - | 489 | ||||||||||||||||
Net realized loss on held-for-trading financial instruments | – | – | (67 | ) | - | (67 | ) | ||||||||||||||
Net unrealized gain (loss) on held-for-trading financial instruments | 77 | 77 | 43 | - | 43 | ||||||||||||||||
Net unrealized loss on held-for-trading financial instruments recognized | (3,606 | ) | (3,606 | ) | (3,606 | ) | - | (3,606 | ) | ||||||||||||
Net unrealized market-to-market adjustments on held-for-trading financial instruments | (3,699 | ) | (3,699 | ) | (3,699 | ) | - | (3,699 | ) | ||||||||||||
Loss before income taxes | (23,757 | ) | 384 | (23,373 | ) | (35,656 | ) | 1,307 | (34,349 | ) | |||||||||||
Taxes recovered | 36 | 36 | 23 | - | 23 | ||||||||||||||||
Loss for the period | (23,721 | ) | 384 | (23,337 | ) | (35,633 | ) | 1,307 | (34,326 | ) | |||||||||||
Other comprehensive income (loss) | |||||||||||||||||||||
Unrealized gain on available-for-sale financial instruments | - | – | 603 | - | 603 | ||||||||||||||||
Realized gain on available-for-sale financial instruments upon transfer | - | – | (1,530 | ) | - | (1,530 | ) | ||||||||||||||
Unrealized gain (loss) on foreign exchange translation of self-sustaining foreign operations | (i) | 21,277 | (1,111 | ) | 20,166 | 18,731 | (732 | ) | 17,999 | ||||||||||||
Other comprehensive income (loss) | 21,277 | (1,111 | ) | 20,166 | 17,804 | (732 | ) | 17,072 | |||||||||||||
Total comprehensive loss for the period | (2,444 | ) | (727 | ) | (3,171 | ) | (17,829 | ) | 575 | (17,254 | ) | ||||||||||
Basic and diluted loss per share | (0.07 | ) | (0.07 | ) | (0.10 | ) | (0.10 | ) | |||||||||||||
Weighted average number of common shares outstanding (thousands) | 351,739 | 351,739 | 343,135 | 343,135 |
(i)Mineral property interests
Under Canadian GAAP the fair value allocation on acquisition of mineral properties, treated as asset acquisitions, included a gross-up of deferred tax on the allocated fair value with the debit entry capitalized to the mineral property and the credit entry accounted for as a future income tax (deferred tax) liability. An IFRS adjusting entry in the amount of $65 million was processed on the January 1, 2010 balance sheet to eliminate the future income tax entry accounted for on acquisition of mineral properties.
19
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and nine months ended September 30, 2011 and 2010 |
(Expressed in thousands of Canadian dollars - unaudited) |
11. | Transition to IFRS (continued) | ||
(a) | Reconciliation of equity and comprehensive loss as previously reported under Canadian GAAP to IFRS (continued) | ||
(i)Mineral property interests (continued) | |||
The adjustment to the values of mineral properties also affected other comprehensive income as well as depletion charges recorded in 2009 and 2010 on the Hollister mineral property. The impact on other comprehensive income relates to the foreign exchange translation of these mineral properties. Adjusting entries were processed to mineral properties, accumulated other comprehensive income (refer (iii) below) and deficit (refer (iv) below). | |||
(ii)Future income taxes (deferred taxes) | |||
In addition to the adjustment to future income taxes as noted in (i) above an additional adjustment was processed to eliminate the future income tax liability recognized under Canadian GAAP on the temporary difference between the accounting and tax base of mineral properties. Under IFRS, deferred taxes should not be recognized for the acquisition of assets that do not constitute a business combination and had no income statement impact on initial recognition. | |||
A third adjustment to future income taxes was processed to account for a deferred tax liability on the temporary difference between the convertible debt instrument’s tax and accounting bases. Under IFRS the debit entry is recognized with the equity component of this compounded financial instrument in contributed surplus. | |||
(iii)Accumulated other comprehensive income | |||
In accordance with IFRS transitional provisions, the Company has elected to reset the foreign cumulative translation adjustment (“CTA”), which includes gains and losses arising from the translation of foreign operations, at the date of transition to IFRS. | |||
The following is a summary of transition adjustments to the Company’s accumulated other comprehensive loss from Canadian GAAP to IFRS: |
December 31 | September 30 | ||||||
2010 | 2010 | ||||||
$ ‘000 | $ ‘000 | ||||||
Accumulated other comprehensive income (loss) as reported under Canadian GAAP | 1,965 | (6,737 | ) | ||||
IFRS adjustments decrease: | |||||||
Deferred income tax on mineral properties (note (i)) | 6,441 | 6,747 | |||||
Cumulative translation adjustment (note (iii)) | 17,989 | 17,989 | |||||
Accumulated other comprehensive income as reported under IFRS | 26,395 | 17,999 |
20
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and nine months ended September 30, 2011 and 2010 |
(Expressed in thousands of Canadian dollars - unaudited) |
11. | Transition to IFRS (continued) | |
(a) | Reconciliation of equity and comprehensive loss as previously reported under Canadian GAAP to IFRS (continued) |
(iv)Deficit
The following is a summary of transition adjustments to the Company’s deficit from Canadian GAAP to IFRS:
December 31 | September 30 | ||||||
2010 | 2010 | ||||||
$‘000 | $‘000 | ||||||
Deficit as reported under Canadian GAAP IFRS adjustments (increase) decrease: | (294,625 | ) | (301,346 | ) | |||
Mineral properties (note (i);(ii)) | (54,530 | ) | (54,530 | ) | |||
2008 depletion (note (i)) | 1,657 | 1,657 | |||||
2009 depletion (note (i)) | 941 | 941 | |||||
2010 depletion (note (i)) | 1,771 | 1,307 | |||||
Convertible debt (note (ii)) | 8,864 | 8,864 | |||||
Cumulative translation adjustment (note (iii)) | (17,989 | ) | (17,989 | ) | |||
Deficit as reported under IFRS | (353,911 | ) | (361,096 | ) |
(b) | Adjustments to the statement of cash flows |
The transition from Canadian GAAP to IFRS had no significant impact on cash flows generated by the Company except that, under IFRS, cash flows relating to interest are classified in a consistent manner under operating, investing or financing activities each period. Under Canadian GAAP, cash flows relating to interest were classified under operating activities.
21