CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED
MARCH 31, 2012
(Unaudited)
(Expressed in thousands of Canadian Dollars, unless otherwise stated)
GREAT BASIN GOLD LTD. | ||||||||
Consolidated Statements of Loss | ||||||||
For the three months ended March 31, 2012 and 2011 | ||||||||
Expressed in thousands of Canadian dollars, except per share data | ||||||||
Note | 2012 | 2011 | ||||||
$ '000 | $ '000 | |||||||
Revenue | 33,373 | 26,343 | ||||||
Cost of operations | ||||||||
Production cost | (27,071 | ) | (13,696 | ) | ||||
Depletion charge | (1,060 | ) | (1,134 | ) | ||||
Depreciation charge | (3,387 | ) | (1,214 | ) | ||||
Expenses | ||||||||
Exploration expenses | (2,114 | ) | (2,901 | ) | ||||
Pre-development expenses | (4,742 | ) | (3,739 | ) | ||||
Corporate and administrative cost | (1,580 | ) | (2,282 | ) | ||||
Environmental impact study | (520 | ) | (437 | ) | ||||
Foreign exchange gain - net | 2,909 | 2,463 | ||||||
Salaries and compensation | ||||||||
Salaries and wages | (2,439 | ) | (2,339 | ) | ||||
Share based payments expense | 10 (c) | (1,019 | ) | (1,441 | ) | |||
Loss from operating activities | (7,650 | ) | (377 | ) | ||||
Interest expense | (7,091 | ) | (5,071 | ) | ||||
Interest income | 422 | 389 | ||||||
Net interest expense | (6,669 | ) | (4,682 | ) | ||||
Loss from operating activities after net interest | (14,319 | ) | (5,059 | ) | ||||
Impairment of loan due from related party | 6 | (2,623 | ) | – | ||||
Loss on derivative instruments - net | (498 | ) | (14,832 | ) | ||||
Loss before income taxes | (17,440 | ) | (19,891 | ) | ||||
Income tax expense | (330 | ) | (450 | ) | ||||
Net loss for the period | (17,770 | ) | (20,341 | ) | ||||
Basic and diluted loss per share | (0.04 | ) | (0.05 | ) | ||||
Weighted average number of common shares outstanding (thousands) | 476,464 | 431,624 |
The accompanying notes are an integral part of these consolidated financial statements
2
GREAT BASIN GOLD LTD. | ||||||
Consolidated Statements of Comprehensive Income (Loss) | ||||||
For the three months ended March 31, 2012 and 2011 | ||||||
Expressed in thousands of Canadian dollars | ||||||
2012 | 2011 | |||||
$ '000 | $ '000 | |||||
Net loss for the period | (17,770 | ) | (20,341 | ) | ||
Other comprehensive income (loss) | ||||||
Cumulative translation adjustment | 18,954 | (26,649 | ) | |||
Other comprehensive income (loss) for the period | 18,954 | (26,649 | ) | |||
Comprehensive income (loss) for the period | 1,184 | (46,990 | ) |
The accompanying notes are an integral part of these consolidated financial statements
3
GREAT BASIN GOLD LTD. | ||||||||
Consolidated Statements of Financial Position | ||||||||
Expressed in thousands of Canadian dollars | ||||||||
March 31 | December 31 | |||||||
Note | 2012 | 2011 | ||||||
$ '000 | $ '000 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | 43,548 | 25,749 | ||||||
Trade and other receivables | 4,561 | 14,060 | ||||||
Inventories | 5 | 25,379 | 19,694 | |||||
Other current assets | 2,237 | 2,404 | ||||||
75,725 | 61,907 | |||||||
Non-current assets | ||||||||
Inventories | 5 | 8,488 | 7,998 | |||||
Loan due from related party | 6 | 2,243 | 3,784 | |||||
Property, plant and equipment | 7 | 763,560 | 720,213 | |||||
Other assets | 5,531 | 5,327 | ||||||
Deferred income tax assets | 50,102 | 51,081 | ||||||
Total assets | 905,649 | 850,310 | ||||||
Liabilities | ||||||||
Current liabilities | ||||||||
Trade and other payables | 58,246 | 56,038 | ||||||
Current portion of long term debt | 8 | 22,352 | 20,371 | |||||
Current portion of other liabilities | 9 | 3,107 | 3,050 | |||||
83,705 | 79,459 | |||||||
Non-current liabilities | ||||||||
Long term debt | 8 | 263,054 | 262,075 | |||||
Other liabilities | 9 | 31,158 | 31,197 | |||||
Site reclamation obligations | 6,081 | 6,011 | ||||||
Total liabilities | 383,998 | 378,742 | ||||||
Equity | ||||||||
Share capital | 10 (b) | 876,843 | 833,643 | |||||
Warrants | 10 (b) | 3,757 | - | |||||
Contributed surplus | 85,279 | 83,337 | ||||||
Accumulated other comprehensive loss | (54,810 | ) | (73,764 | ) | ||||
Deficit | (389,418 | ) | (371,648 | ) | ||||
Total equity | 521,651 | 471,568 | ||||||
Total liabilities and equity | 905,649 | 850,310 |
The accompanying notes are an integral part of these consolidated 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 |
For the three months ended March 31, 2012 and 2011 |
Expressed in thousands of Canadian dollars |
Accumulated | ||||||||||||||||||
other | ||||||||||||||||||
Contributed | comprehensive | |||||||||||||||||
Share capital | Warrants | surplus | (loss) income | Deficit | Total | |||||||||||||
$'000 | $'000 | $'000 | $'000 | $'000 | $'000 | |||||||||||||
Balance - January 1, 2012 | 833,643 | - | 83,337 | (73,764 | ) | (371,648 | ) | 471,568 | ||||||||||
Comprehensive loss for the period | - | - | - | 18,954 | (17,770 | ) | 1,184 | |||||||||||
Net loss for the period | - | - | - | - | (17,770 | ) | (17,770 | ) | ||||||||||
Other comprehensive income | - | - | - | 18,954 | - | 18,954 | ||||||||||||
Employee share options | ||||||||||||||||||
Value of services recognized (note 10(c)) | - | - | 1,942 | - | - | 1,942 | ||||||||||||
Proceeds on issuance of units in public offering (net of transaction costs) (note 10(b)) | 43,200 | 3,757 | - | - | - | 46,957 | ||||||||||||
Balance - March 31, 2012 | 876,843 | 3,757 | 85,279 | (54,810 | ) | (389,418 | ) | 521,651 | ||||||||||
Balance - January 1, 2011 | 709,449 | 6,108 | 77,676 | 26,395 | (353,911 | ) | 465,717 | |||||||||||
Comprehensive loss for the period | - | - | - | (26,649 | ) | (20,341 | ) | (46,990 | ) | |||||||||
Net loss for the period | - | - | - | - | (20,341 | ) | (20,341 | ) | ||||||||||
Other comprehensive loss | - | - | - | (26,649 | ) | - | (26,649 | ) | ||||||||||
Employee share options | ||||||||||||||||||
Value of services recognized | - | - | 1,870 | - | - | 1,870 | ||||||||||||
Proceeds on issuing shares (note 10(c)) | 2,221 | - | (812 | ) | - | - | 1,409 | |||||||||||
Warrants | ||||||||||||||||||
Proceeds on issuing shares | 6,504 | (1,066 | ) | - | - | - | 5,438 | |||||||||||
Proceeds on issuance of shares in public offering (net of transaction costs) | 81,270 | - | - | - | - | 81,270 | ||||||||||||
Balance - March 31, 2011 | 799,444 | 5,042 | 78,734 | (254 | ) | (374,252 | ) | 508,714 |
The accompanying notes are an integral part of these consolidated financial statements
5
GREAT BASIN GOLD LTD. | ||||||
Consolidated Statements of Cash Flows | ||||||
For the three months ended March 31, 2012 and 2011 | ||||||
Expressed in thousands of Canadian dollars | ||||||
2012 | 2011 | |||||
$ '000 | $ '000 | |||||
Operating activities | ||||||
Loss for the period | (17,770 | ) | (20,341 | ) | ||
Items not involving cash | ||||||
Production non-cash charges | 826 | 170 | ||||
Depletion | 1,060 | 1,134 | ||||
Depreciation | 3,540 | 1,394 | ||||
Exploration non-cash charges | 20 | 59 | ||||
Pre-development non-cash charges | 269 | 388 | ||||
Unrealized foreign exchange gain | (3,103 | ) | (2,812 | ) | ||
Share based payments expense | 1,019 | 1,441 | ||||
Impairment of loan due from related party | 2,623 | – | ||||
Loss on derivative instruments - net | 498 | 14,802 | ||||
Adjusted for | ||||||
Interest expense | 7,091 | 5,071 | ||||
Interest income | (422 | ) | (389 | ) | ||
Changes in non-cash operating working capital | ||||||
Trade and other receivables | 9,511 | 1,784 | ||||
Other current assets | 171 | 183 | ||||
Inventories | (6,502 | ) | (8,540 | ) | ||
Trade and other payables | 1,734 | (3,826 | ) | |||
Net cash generated from (utilized by) operating activities | 565 | (9,482 | ) | |||
Investing activities | ||||||
Advance to related party | (631 | ) | – | |||
Purchase of property, plant and equipment | (28,817 | ) | (36,534 | ) | ||
Interest income | 107 | 170 | ||||
Reclamation deposits | (142 | ) | (361 | ) | ||
Net cash utilized by investing activities | (29,483 | ) | (36,725 | ) | ||
Financing activities | ||||||
Common shares and warrants issued for cash, net of issue costs | 46,957 | 88,117 | ||||
Proceeds on issuance of debt | 9,957 | 68,810 | ||||
Repayment of debt | (8,736 | ) | (53,686 | ) | ||
Interest expense | (1,984 | ) | (1,128 | ) | ||
Net cash generated from financing activities | 46,194 | 102,113 | ||||
Increase in cash and cash equivalents | 17,276 | 55,906 | ||||
Cash and cash equivalents, beginning of period | 25,749 | 12,855 | ||||
Foreign exchange movement on cash and cash equivalents | 523 | (744 | ) | |||
Cash and cash equivalents, end of period | 43,548 | 68,017 |
Refer note 11 of the notes to the consolidated financial statements for supplementary information to the cash flow statement. The accompanying notes are an integral part of these consolidated financial statements
6
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three months ended March 31, 2012 and 2011 |
1. | General information |
Great Basin Gold Ltd. is incorporated under the laws of the Province of British Columbia and its registered address is 1108-1030 West Georgia Street, Vancouver BC, Canada. Great Basin Gold Ltd., including its subsidiaries (“Great Basin” or “the Company”), is a mineral exploration and development company with two operating assets, both in the production build-up phase, the Hollister Project on the Carlin Trend in Nevada, USA and the Burnstone Project in the Witwatersrand Goldfields in South Africa. 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 month period ended March 31, 2012 are not necessarily indicative of the results that may be expected for the full fiscal year ending December 31, 2012. 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 |
The interim consolidated financial statements for the three months ended March 31, 2012 has been prepared in accordance with IAS34, Interim financial reporting. The condensed interim financial information should be read in conjunction with the annual financial statements for the year ended December 31, 2011, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). | |
3. | 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. Accordingly, they should be read in conjunction with the Company’s most recent annual financial statements. The policies applied in these condensed consolidated financial statements are based on IFRS issued and outstanding as of May 11, 2012, the date the Board of Directors approved the financial statements. | |
Accounting standards and amendments issued but not yet adopted | |
Refer to note 2 of the Company’s most recent annual financial statements for a comprehensive listing of revised standards and amendments which are effective for annual periods beginning on or after January 1, 2013 with earlier application permitted. The Company has not yet assessed the impact of these standards and amendments or determined whether it will early adopt them. |
7
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three months ended March 31, 2012 and 2011 |
4. | Estimates |
The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. | |
In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Company’s accounting policies and key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2011. | |
5. | Inventories |
March 31 | December 31 | ||||||
2012 | 2011 | ||||||
$ ‘000 | $ ‘000 | ||||||
Stores and materials | 4,487 | 4,699 | |||||
Unprocessed ore | 3,919 | 2,437 | |||||
Precious metals in process | 25,461 | 20,556 | |||||
33,867 | 27,692 | ||||||
Non-current | 8,488 | 7,998 | |||||
Current | 25,379 | 19,694 | |||||
33,867 | 27,692 |
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. The cost of inventories recognized as an expense and included in cost of operations was $32 million (2011: $16 million).
Inventories include unprocessed ore and precious metals in process of $3.3 million carried at net realizable value (2010: $nil).
Non-current inventories comprise of gold in lock-up in metallurgical plants which are expected to be realized upon plant clean-up or dismantling.
6. | Related party balances and transactions |
Related party transactions are recorded at the exchange amount which is the amount of consideration paid or received. | |
Loan due from related party |
March 31 | December 31 | ||||||
2012 | 2011 | ||||||
$’000 | $’000 | ||||||
Balance, beginning of the period | 3,784 | 13,372 | |||||
Cash advances | 631 | 4,506 | |||||
Interest earned | 315 | 1,000 | |||||
Impairment provision | (2,623 | ) | (13,680 | ) | |||
Foreign exchange | 136 | (1,414 | ) | ||||
Balance, end of the period | 2,243 | 3,784 |
8
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three months ended March 31, 2012 and 2011 |
6. | Related party balances and transactions (continued) |
In 2007 the Company completed a series of transactions in order to achieve compliance with South Africa’s post-apartheid legislation designed to facilitate participation by historical disadvantages South Africans (“HDSAs”) in the mining industry. This legislation is reflected in the South African Mining Charter and required the Company to achieve a target of 26% ownership by HDSA in the Company’s South African projects by 2014. In order to comply with these requirements, Tranter Burnstone (Pty) Ltd (“Tranter”), an HDSA company, acquired 19,938,650 Great Basin treasury common shares for $38 million (ZAR260 million) which, because it involved indirect economic participation in both the Hollister and Burnstone projects, was deemed equivalent to a 26% interest in Burnstone. Tranter borrowed ZAR200 million ($27 million) from Investec Bank Ltd (“Investec”), a South African bank, to partly fund the purchase of the shares and the Company gave a loan guarantee in favour of Tranter limited of ZAR140 ($19 million) million. A loan of $16.7 million (ZAR 128 million) was advanced to Tranter under the guarantee agreement to enable Tranter to meet its payment obligation to Investec. | |
As a result of this loan the remaining guarantee available, as at March 31, 2012, is $1.6 million (ZAR12.3 million) (2010: $2.2 million (ZAR17 million)) (refer note 9). | |
Any advances to Tranter are due to be repaid in installments from 2014 to 2017, with interest accruing at the South African prime interest rate plus 2%. Security for any advances made includes a second charge against any shares of the Company held by Tranter (second to Investec). | |
The fair value of the security, based on the prolonged decline in the Company’s share price, was deemed inadequate and the Company raised a fair value impairment provision of $2.6 million (ZAR20.3 million) during the quarter, in addition to the $13.7 million (ZAR100 million) raised in quarter 4 of 2011, against the loan to provide for its exposure to potential future repayment losses. | |
7. | Property, plant and equipment |
Assets | |||||||||||||||||||
Mineral | Mine | Mine | under | Other | |||||||||||||||
properties | infrastructure | equipment | construction | assets | Total | ||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | ||||||||||||||
Period ended March 31, 2012 | |||||||||||||||||||
At January 1, 2012 | 164,854 | 460,320 | 40,131 | 47,141 | 7,767 | 720,213 | |||||||||||||
Additions | - | 13,898 | 13 | 16,498 | 64 | 30,473 | |||||||||||||
Transfers | - | 1,565 | 1,535 | (3,100 | ) | - | - | ||||||||||||
Depletion and depreciation | (1,153 | ) | (1,731 | ) | (3,073 | ) | - | (388 | ) | (6,345 | ) | ||||||||
Foreign exchange differences | 1,545 | 15,157 | 1,033 | 1,280 | 204 | 19,219 | |||||||||||||
At March 31, 2012 | 165,246 | 489,209 | 39,639 | 61,819 | 7,647 | 763,560 | |||||||||||||
At March 31, 2012 | |||||||||||||||||||
Cost | 186,560 | 501,668 | 67,494 | 61,819 | 12,256 | 829,797 | |||||||||||||
Accumulated depreciation | (21,314 | ) | (12,459 | ) | (27,855 | ) | - | (4,609 | ) | (66,237 | ) | ||||||||
Net book value | 165,246 | 489,209 | 39,639 | 61,819 | 7,647 | 763,560 |
9
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three months ended March 31, 2012 and 2011 |
7. | Property, plant and equipment |
Assets | |||||||||||||||||||
Mineral | Mine | Mine | under | Other | |||||||||||||||
properties | infrastructure | equipment | construction | assets | Total | ||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | ||||||||||||||
Year ended December 31, 2011 | |||||||||||||||||||
At January 1, 2011 | 182,992 | 23,064 | 44,399 | 435,255 | 9,664 | 695,374 | |||||||||||||
Additions | 85 | 389 | 11,443 | 138,151 | 898 | 150,966 | |||||||||||||
Transfers | - | 482,985 | - | (482,985 | ) | - | - | ||||||||||||
Depletion and depreciation | (5,354 | ) | (9,103 | ) | (9,634 | ) | - | (1,508 | ) | (25,599 | ) | ||||||||
Foreign exchange differences | (12,869 | ) | (37,015 | ) | (6,077 | ) | (43,280 | ) | (1,287 | ) | (100,528 | ) | |||||||
At December 31, 2011 | 164,854 | 460,320 | 40,131 | 47,141 | 7,767 | 720,213 | |||||||||||||
At December 31, 2011 | |||||||||||||||||||
Cost | 185,404 | 470,913 | 64,460 | 47,141 | 11,959 | 779,877 | |||||||||||||
Accumulated depreciation | (20,550 | ) | (10,593 | ) | (24,329 | ) | - | (4,192 | ) | (59,664 | ) | ||||||||
Net book value | 164,854 | 460,320 | 40,131 | 47,141 | 7,767 | 720,213 |
Depletion of $1.2 million relating to stockpiled tons and ounces in process was capitalized to the value of the unprocessed ore and precious metals in process (2011: $1.3 million) (refer note 5). Mineral properties of $119.9 million consisting of the Hollister, Esmeralda and Burnstone properties and fixed assets of $597 million have been pledged as security for the term loans (refer note 8(a) and 8(b)).
Mining equipment includes leased assets with net book values as set out below. These assets are pledged as security for the related finance leases (refer note 8).
March 31 | December 31 | ||||||
2012 | 2011 | ||||||
$’000 | $’000 | ||||||
Cost | 1,163 | 5,451 | |||||
Accumulated depreciation | (177 | ) | (981 | ) | |||
Net book value | 986 | 4,470 |
8. | Long term debt |
Non-current portion of long term debt |
March 31 | December 31 | ||||||
2012 | 2011 | ||||||
$ ‘000 | $ ‘000 | ||||||
Convertible debentures | 99,555 | 97,669 | |||||
Finance lease liabilities | 57 | 71 | |||||
Term loan I (note 8(a)) | 129,282 | 125,879 | |||||
Term loan II (note 8(b)) | 34,160 | 38,456 | |||||
263,054 | 262,075 |
10
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three months ended March 31, 2012 and 2011 |
8. | Long term debt (continued) |
Current portion of long term debt |
March 31 | December 31 | ||||||
2012 | 2011 | ||||||
$ ‘000 | $ ‘000 | ||||||
Convertible debentures | 3,373 | 843 | |||||
Finance lease liabilities | 692 | 2,902 | |||||
Term loan I (note 8(a)) | 4,282 | 280 | |||||
Term loan II (note 8(b)) | 14,005 | 16,346 | |||||
22,352 | 20,371 |
The continuity of long term debt is as follows:
March 31 | December 31 | ||||||
2012 | 2011 | ||||||
$ ‘000 | $ ‘000 | ||||||
Balance, beginning of the period | 282,446 | 209,578 | |||||
New debt | 9,957 | 135,321 | |||||
New leases | - | 1,989 | |||||
Transaction cost | (195 | ) | (6,525 | ) | |||
Repayment of debt and interest | (10,257 | ) | (94,010 | ) | |||
Settlement loss on senior secured notes | - | 8,817 | |||||
Amortized transaction cost | 435 | 1,231 | |||||
Interest expense | 6,389 | 25,476 | |||||
Foreign exchange | (3,369 | ) | 569 | ||||
Balance, end of the period | 285,406 | 282,446 |
(a) Term loan I
In December 2011, the Company successfully negotiated the restructuring of Term loan I, thereby increasing the facility to $152.6 million (US$150 million) and extending repayment to 2016. $132 million (US$130 million) and $10 million (US$10 million) of the restructured facility was drawn down on December 15, 2011 and February 17, 2012 respectively, with an additional $10 million (US$10 million) available for future draw down on March 31, 2012.
Term loan I has a maximum term of 5 years from the December 15, 2011 draw down and capital will be repaid in 16 quarterly consecutive installments, commencing on March 15, 2013. The interest rate for Term loan I is linked to the US$ London interbank offered rate (“US$ LIBOR”) at a premium of 4% above US$ LIBOR and is fixed on a quarterly basis. The floating rate on March 31, 2012 is 4.47365% (USD LIBOR of 0.47365% plus 4% premium).
The Burnstone Property, its assets and certain subsidiary guarantees serve as security for the facility (refer note 7).
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, a loan life cover ratio and available liquidity. As at March 31, 2012, the Company assessed and complied with all covenants.
Refer to note 9(a) for details of the hedge structure entered into under the Term loan I agreement.
11
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three months ended March 31, 2012 and 2011 |
8. | Long term debt (continued) |
(b) Term loan II | |
Term loan II is being repaid in 15 remaining quarterly consecutive installments. The interest rate for Term loan II is linked to the US$ LIBOR at a premium of 3.75% above US$ LIBOR and is fixed on a quarterly basis. The floating rate on March 31, 2012 is 4.22365% (USD LIBOR of 0.47365% plus 3.75% premium). | |
The Hollister project and a surety signed by the Company serve as security for the loan (refer note 7). | |
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 March 31, 2012, the Company assessed and complied with all covenants. | |
Refer to note 9(b) for details of the hedge structure entered into under the Term loan II agreement. | |
9. | Other liabilities |
Non-current portion of other liabilities | |||||||
March 31 | December 31 | ||||||
2012 | 2011 | ||||||
$ ‘000 | $ ‘000 | ||||||
Zero cost collar program I (note 9(a)) | 19,025 | 17,834 | |||||
Zero cost collar program II (note 9(b)) | 12,133 | 13,363 | |||||
31,158 | 31,197 |
Current portion of other liabilities | |||||||
March 31 | December 31 | ||||||
2012 | 2011 | ||||||
$ ‘000 | $ ‘000 | ||||||
Financial guarantee | 2,243 | 2,165 | |||||
Zero cost collar program I (note 9(a)) | 534 | 666 | |||||
Zero cost collar program II (note 9(b)) | 330 | 219 | |||||
3,107 | 3,050 |
The continuity of other liabilities is as follows: | |||||||
March 31 | December 31 | ||||||
2012 | 2011 | ||||||
$ ‘000 | $ ‘000 | ||||||
Balance, beginning of the period | 34,247 | 12,697 | |||||
ZCC fair value upon inception | - | 43,212 | |||||
ZCC fair value upon novation | - | (18,295 | ) | ||||
ZCC marked-to-market adjustments | 553 | (3,814 | ) | ||||
Foreign exchange | (535 | ) | 447 | ||||
Balance, end of the period | 34,265 | 34,247 |
12
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three months ended March 31, 2012 and 2011 |
9. | Other liabilities (continued) |
(a) Zero cost collar program I | |
In connection with Term loan I (refer note 8(a)), the Company executed a zero cost collar (“ZCC”) hedge program for a total 165,474 gold ounces over a period of five years that commenced in January 2012. | |
The pricing and delivery dates of the put and call options are presented in note 9(d) below. | |
The marked-to-market movements until March 31, 2012 were calculated using an option pricing model with inputs based on the following assumptions: |
March 31 | December 31 | ||||||
2012 | 2011 | ||||||
Gold price (per ounce) | US$1,669 | US$1,564 | |||||
Risk free interest rate | 0.18% - 1.244% | 0.33% - 1.285% | |||||
Expected life | 1 - 57 months | 1 – 60 months | |||||
Gold price volatility | 14.64% - 24.32% | 20.35% - 32% |
Gold delivery positions as at March 31, 2012: | |||||||
March 31 | December 31 | ||||||
2012 | 2011 | ||||||
Expired unexercised at no cost | 3,054 ounces | Nil ounces | |||||
Delivered | Nil ounces | Nil ounces | |||||
Remaining positions | 162,420 ounces | 165,474 ounces |
(b) Zero cost collar program II
In connection with Term loan II (refer note 8(b)), the Company executed a ZCC hedge program for a total 117,500 gold ounces over a period of four years that commenced in January 2012. The pricing and delivery dates of the put and call options are presented in note 9(d) below.
The marked-to-market movements until March 31, 2012 were calculated using an option pricing model with inputs based on the following assumptions:
March 31 | December 31 | ||||||
2012 | 2011 | ||||||
Gold price (per ounce) | US$1,669 | US$1,564 | |||||
Risk free interest rate | 0.18% - 0.97% | 0.33% - 1.06% | |||||
Expected life | 1 - 45 months | 1 - 48 months | |||||
Gold price volatility | 14.64% - 22.82% | 20.35% - 30.76% |
Gold delivery positions as at March 31, 2012: | |||||||
March 31 | December 31 | ||||||
2012 | 2011 | ||||||
Expired unexercised at no cost | 2,625 ounces | Nil ounces | |||||
Delivered | Nil ounces | Nil ounces | |||||
Remaining positions | 114,875 ounces | 117,500 ounces |
13
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three months ended March 31, 2012 and 2011 |
9. | Other liabilities (continued) |
(c) Classification | |
The fair values of the derivative instruments as of March 31, 2012 are as follows: |
Asset | Liability | Net | ||||||||||
derivatives | derivatives | derivatives | ||||||||||
Estimated | Estimated | Estimated | ||||||||||
Derivatives not designated as hedging | Statement of financial | fair value | fair value | fair value | ||||||||
instruments | position classification | $’000 | $’000 | $’000 | ||||||||
Commodity contracts (gold) – ZCC 1 | Other liabilities | 6,518 | (25,543 | ) | (19,025 | ) | ||||||
Commodity contracts (gold) – ZCC 2 | Other liabilities | 1,430 | (13,563 | ) | (12,133 | ) | ||||||
7,948 | (39,106 | ) | (31,158 | ) | ||||||||
Commodity contracts (gold) – ZCC 1 | Current other liabilities | 1 | (535 | ) | (534 | ) | ||||||
Commodity contracts (gold) – ZCC 2 | Current other liabilities | 2 | (332 | ) | (330 | ) | ||||||
3 | (867 | ) | (864 | ) |
(d) Gold delivery positions
The Company’s gold delivery positions as at March 31, 2012 are as follows:
Put options | |||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | Total | ||||||||||||||||
Strike price | AU oz | AU oz | AU oz | AU oz | AU oz | AU oz | |||||||||||||||
ZCC – 1 | $ | 900 | 18,258 | - | - | - | - | 18,258 | |||||||||||||
ZCC – 1 | $ | 950 | - | 28,506 | - | - | - | 28,506 | |||||||||||||
ZCC – 1 | $ | 1,200 | - | - | 34,008 | 39,768 | 41,880 | 115,656 | |||||||||||||
ZCC – 2 | $ | 1,050 | 7,000 | 33,875 | 36,000 | 35,083 | 2,917 | 114,875 | |||||||||||||
25,258 | 62,381 | 70,008 | 74,851 | 44,797 | 277,295 |
Call options | |||||||||||||||||||||
Strike | 2012 | 2013 | 2014 | 2015 | 2016 | Total | |||||||||||||||
price | AU oz | AU oz | AU oz | AU oz | AU oz | AU oz | |||||||||||||||
ZCC – 1 | $ | 1,890 | 9,129 | 14,253 | 17,004 | 19,884 | 20,940 | 81,210 | |||||||||||||
ZCC – 1 | $ | 1,930 | 9,129 | 14,253 | 17,004 | 19,884 | 20,940 | 81,210 | |||||||||||||
ZCC – 2 | $ | 1,930 | 7,000 | 33,875 | 36,000 | 35,083 | 2,917 | 114,875 | |||||||||||||
25,258 | 62,381 | 70,008 | 74,851 | 44,797 | 277,295 |
10. | Share capital |
(a) Authorized share capital | |
The Company’s authorized share capital consists of an unlimited number of common shares without par value. |
14
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three months ended March 31, 2012 and 2011 |
10. | Share capital (continued) | |
(b) | Public offering, March 2012 | |
The Company completed a public offering on March 30, 2012 whereby it issued 66,700,000 units (the “Units”) at a price of $0.75 per Unit. Each Unit consisted of one common share (each, a “Common Share”) in the capital of the Company and one-half of one common share purchase warrant (each whole common share purchase warrant, a “Warrant”) of the Company. | ||
Each Warrant entitles the holder thereof to purchase one Common Share at a price of $0.90 until expiry on March 30, 2014. | ||
On the date of issuance, the fair value of the 33,350,000 warrants was estimated at $0.12 per warrant. The valuation was performed by using an option pricing model. | ||
The Company paid the underwriters a fee of $2.5 million and incurred other share issue costs of approximately $0.6 million. Net proceeds of $43.2 million and $3.8 million have been recorded as share capital and warrants respectively. | ||
(c) | 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 | $ 1.97 | 17,958 | 2.22 | ||||
Granted to employees | $ 1.10 | 7,175 | |||||
Expired | $ 1.75 | (1,136 | ) | ||||
Forfeited | $ 1.81 | (1,168 | ) | ||||
$ 1.72 | 22,829 | 2.33 |
As at March 31, 2012, 12.1 million of the outstanding options were exercisable at an average exercise price of $1.93 per option and expiry dates ranging between April 18, 2012 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 period’s profit or loss.
The exercise prices of all share purchase options granted during the three months ended March 31, 2012 and 2011 were at or above the market price at the grant date.
15
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three months ended March 31, 2012 and 2011 |
10. | Share capital (continued) |
(c) Share option plan (continued) | |
Using an option pricing model with the assumptions noted below, the estimated fair value of options granted to employees which have been included in the statement of loss for the three months ended March 31, 2012, is as follows: |
Three months ended March 31 | |||||||
2012 | 2011 | ||||||
$ ‘000 | $ ‘000 | ||||||
Total compensation cost recognized, credited to contributed surplus | 1,942 | 1,870 | |||||
Compensation cost allocated to production cost | (923 | ) | (333 | ) | |||
Compensation cost capitalized on Burnstone mine development | - | (96 | ) | ||||
Share based payments expense | 1,019 | 1,441 |
The weighted-average assumptions used to estimate the fair value of options granted during the respective periods were as follows:
Three months ended March 31 | |||||||
2012 | 2011 | ||||||
Risk free interest rate | 1.6% | 2.65% | |||||
Expected life | 3 years | 3.4 years | |||||
Expected volatility | 60% | 82% | |||||
Expected dividends | Nil | Nil |
11. | Additional cash flow information |
Supplementary information | |||||||
Three months ended March 31 | |||||||
2012 | 2011 | ||||||
$’000 | $’000 | ||||||
Income taxes paid | 330 | 450 | |||||
Non-cash investing activities: | |||||||
Depreciation capitalized to property, plant and machinery (note 7) | 1,657 | 749 | |||||
Accrued interest capitalized to property, plant and machinery (note 7) | - | 2,515 | |||||
Share based compensation capitalized (refer note 10(c)) | - | 96 | |||||
Non-cash financing activities: | |||||||
Fair value of stock options transferred to share capital from contributed surplus on options exercised | - | 812 | |||||
Fair value of warrants transferred to share capital on warrants exercised | - | 1,066 |
12. | Segment disclosure |
The Company operates in reportable operating segments to deliver on its strategy to explore, develop and exploit 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 months ended March 31, 2012 and 2011 |
12. | Segment disclosure (continued) |
Segment statement of income – March 2012 |
North | South | |||||||||||||||
American | African | Tanzanian | ||||||||||||||
operations | operations | operations | Other1 | Total | ||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | ||||||||||||
Revenue | 23,053 | 10,320 | - | - | 33,373 | |||||||||||
Cost of operations | ||||||||||||||||
Production cost | (13,042 | ) | (14,029 | ) | - | - | (27,071 | ) | ||||||||
Depletion charge | (1,004 | ) | (56 | ) | - | - | (1,060 | ) | ||||||||
Depreciation charge | (970 | ) | (2,417 | ) | - | - | (3,387 | ) | ||||||||
Expenses | ||||||||||||||||
Exploration expenses | (1,665 | ) | (118 | ) | (331 | ) | - | (2,114 | ) | |||||||
Pre-development expenses | (4,742 | ) | - | - | - | (4,742 | ) | |||||||||
Corporate and administrative cost | - | (24 | ) | (24 | ) | (1,532 | ) | (1,580 | ) | |||||||
Environmental impact study | (520 | ) | - | - | - | (520 | ) | |||||||||
Foreign exchange gain (loss) | - | 45 | (1 | ) | 2,865 | 2,909 | ||||||||||
Salaries and compensation | ||||||||||||||||
Salaries and wages | - | - | - | (2,439 | ) | (2,439 | ) | |||||||||
Share based compensation | - | - | - | (1,019 | ) | (1,019 | ) | |||||||||
Profit (loss) from operating activities | 1,110 | (6,279 | ) | (356 | ) | (2,125 | ) | (7,650 | ) | |||||||
Interest expense | (1,038 | ) | (1,637 | ) | - | (4,416 | ) | (7,091 | ) | |||||||
Interest income | - | 413 | - | 9 | 422 | |||||||||||
Net interest expense | (1,038 | ) | (1,224 | ) | - | (4,407 | ) | (6,669 | ) | |||||||
Profit (loss) from operatingactivities after net interest | 72 | (7,503 | ) | (356 | ) | (6,532 | ) | (14,319 | ) | |||||||
Impairment of loan due from related party | - | - | - | (2,623 | ) | (2,623 | ) | |||||||||
Profit (loss) on derivative instruments – net | 861 | (1,359 | ) | - | - | (498 | ) | |||||||||
Profit (loss) before income taxes | 933 | (8,862 | ) | (356 | ) | (9,155 | ) | (17,440 | ) | |||||||
Income tax expense | (330 | ) | - | - | - | (330 | ) | |||||||||
Net profit (loss) for the period | 603 | (8,862 | ) | (356 | ) | (9,155 | ) | (17,770 | ) |
1 Corporate entities
17
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three months ended March 31, 2012 and 2011 |
12. | Segment disclosure (continued) |
Segment statement of income – March 2011 |
North | South | |||||||||||||||
American | African | Tanzanian | ||||||||||||||
operations | operations | operations | Other1 | Total | ||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | ||||||||||||
Revenue | 22,509 | 3,834 | - | - | 26,343 | |||||||||||
Cost of operations | ||||||||||||||||
Production cost | (11,239 | ) | (2,457 | ) | - | - | (13,696 | ) | ||||||||
Depletion charge | (1,105 | ) | (29 | ) | - | - | (1,134 | ) | ||||||||
Depreciation charge | (728 | ) | (486 | ) | - | - | (1,214 | ) | ||||||||
Expenses | ||||||||||||||||
Exploration expenses | (2,435 | ) | (124 | ) | (342 | ) | - | (2,901 | ) | |||||||
Pre-development expenses | (3,739 | ) | - | - | - | (3,739 | ) | |||||||||
Corporate and administrative cost | - | - | (51 | ) | (2,231 | ) | (2,282 | ) | ||||||||
Environmental impact study | (437 | ) | - | - | - | (437 | ) | |||||||||
Foreign exchange (loss) gain | - | - | (6 | ) | 2,469 | 2,463 | ||||||||||
Salaries and compensation | ||||||||||||||||
Salaries and wages | - | - | - | (2,339 | ) | (2,339 | ) | |||||||||
Share based compensation | - | - | - | (1,441 | ) | (1,441 | ) | |||||||||
Profit (loss) from operating activities | 2,826 | 738 | (399 | ) | (3,542 | ) | (377 | ) | ||||||||
Interest expense | (156 | ) | (1,270 | ) | - | (3,645 | ) | (5,071 | ) | |||||||
Interest income | - | 368 | - | 21 | 389 | |||||||||||
Net interest expense | (156 | ) | (902 | ) | - | (3,624 | ) | (4,682 | ) | |||||||
Profit (loss) from operatingactivities after net interest | 2,670 | (164 | ) | (399 | ) | (7,166 | ) | (5,059 | ) | |||||||
(Loss) profit on derivative instruments – net | (8,451 | ) | 2,436 | - | (8,817 | ) | (14,832 | ) | ||||||||
(Loss) profit before income taxes | (5,781 | ) | 2,272 | (399 | ) | (15,983 | ) | (19,891 | ) | |||||||
Income tax expense | (450 | ) | - | - | - | (450 | ) | |||||||||
Net (loss) profit for the period | (6,231 | ) | 2,272 | (399 | ) | (15,983 | ) | (20,341 | ) |
1 Corporate entities
Refined precious metals were sold to RK Mine Finance Trust I (“RK Mine”) under the terms of an off-take agreement.
Statement of financial position
North | South | |||||||||||||||
American | African | Tanzanian | ||||||||||||||
operations | operations | operations | Other1 | Total | ||||||||||||
March 31, 2012 | $’000 | $’000 | $’000 | $’000 | $’000 | |||||||||||
Total assets | 175,214 | 665,287 | 45,237 | 19,911 | 905,649 | |||||||||||
Total liabilities | 85,044 | 192,508 | 18 | 106,428 | 383,998 |
18
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three months ended March 31, 2012 and 2011 |
12. | Segment disclosure (continued) |
Statement of financial position (continued) | ||||||||||||||||
North | South | |||||||||||||||
American | African | Tanzanian | ||||||||||||||
operations | operations | operations | Other1 | Total | ||||||||||||
December 31, 2011 | $’000 | $’000 | $’000 | $’000 | $’000 | |||||||||||
Total assets | 180,682 | 613,772 | 45,392 | 10,464 | 850,310 | |||||||||||
Total liabilities | 100,198 | 174,941 | 19 | 103,584 | 378,742 |
1 Corporate entities
Additions to non-current assets2 | ||||||||||||||||
North | South | |||||||||||||||
American | African | Tanzanian | ||||||||||||||
operations | operations | operations | Other1 | Total | ||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | ||||||||||||
March 31, 2012 | 1,111 | 29,330 | - | 32 | 30,473 | |||||||||||
December 31, 2011 | 7,353 | 143,641 | (117 | ) | 89 | 150,966 |
1 Corporate entities
2 Additions to non-current assets exclude other than financial instruments and deferred tax assets
13. | Subsequent events |
Subsequent to March 31, 2012 | |
(a)Public offering – overallotment | |
On April 5, 2012, the Company issued 10 million units for proceeds of $7.5 million upon closing the $50 million public offering’s overallotment (refer note 10(b)). | |
A unit consists of one Great Basin common share and one half of a purchase warrant. The warrants are exercisable at $0.90 per warrant and will expire on March 30, 2014. | |
The Company paid the underwriters a fee of $0.4 million and incurred other share issue costs of approximately $0.04 million. |
19
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three months ended March 31, 2012 and 2011 |
13. | Subsequent events (continued) |
(b) Related party transaction | |
Following negotiations between the Company, Tranter and Investec, a Term sheet was agreed to during late April 2012 setting out the mutually beneficial proposal whereby the Company provides Tranter with further financial assistance over a period of 18 months to enable them to meet their proposed restructured loan repayment obligations to Investec and thereby remove their current breach on the loan agreement. In terms of the proposal Investec will remove all cash margin requirements and also restructure the repayment in such a manner that the required assistance from the Company does not impact on its short term cash requirements. The parties are currently working on finalizing the legal agreements and obtaining the required approvals to enter into the binding legal agreements. It is anticipated that this restructured loan and financial assistance agreement will be executed before May 30, 2012. Refer to note 6 for more information on the loan advanced to Tranter. |
20