CONSOLIDATED FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED
JUNE 30, 2012
(Unaudited)
(Expressed in thousands of Canadian Dollars, unless otherwise stated)
GREAT BASIN GOLD LTD. | ||||||||||||||
Consolidated Statements of Loss | ||||||||||||||
Expressed in thousands of Canadian dollars, except per share data | ||||||||||||||
Three months ended | Six months ended | |||||||||||||
June 30 | June 30 | |||||||||||||
Note | 2012 | 2011 | 2012 | 2011 | ||||||||||
$ '000 | $ '000 | $ '000 | $ '000 | |||||||||||
Revenue | 32,371 | 56,738 | 65,744 | 83,081 | ||||||||||
Cost of operations | ||||||||||||||
Production cost | (30,165 | ) | (29,272 | ) | (57,236 | ) | (42,968 | ) | ||||||
Depletion charge | (1,137 | ) | (1,856 | ) | (2,197 | ) | (2,990 | ) | ||||||
Depreciation charge | (4,043 | ) | (5,984 | ) | (7,430 | ) | (7,198 | ) | ||||||
Expenses | ||||||||||||||
Exploration expenses | (2,605 | ) | (3,443 | ) | (4,719 | ) | (6,344 | ) | ||||||
Pre-development expenses | (5,009 | ) | (3,686 | ) | (9,751 | ) | (7,425 | ) | ||||||
Corporate and administrative cost | (1,466 | ) | (2,170 | ) | (3,046 | ) | (4,452 | ) | ||||||
Environmental impact study | (362 | ) | (488 | ) | (882 | ) | (925 | ) | ||||||
Foreign exchange (loss) gain - net | (3,332 | ) | 714 | (423 | ) | 3,177 | ||||||||
Salaries and compensation | ||||||||||||||
Salaries and wages | (2,136 | ) | (2,171 | ) | (4,575 | ) | (4,510 | ) | ||||||
Share based payments expense | 10 (c) | (1,757 | ) | (1,574 | ) | (2,776 | ) | (3,015 | ) | |||||
(Loss) profit from operating activities | (19,641 | ) | 6,808 | (27,291 | ) | 6,431 | ||||||||
Interest expense | (7,272 | ) | (6,126 | ) | (14,363 | ) | (11,197 | ) | ||||||
Interest income | 426 | 404 | 848 | 793 | ||||||||||
Net interest expense | (6,846 | ) | (5,722 | ) | (13,515 | ) | (10,404 | ) | ||||||
(Loss) profit from operating activities after net interest | (26,487 | ) | 1,086 | (40,806 | ) | (3,973 | ) | |||||||
Impairment of loan due from related party | 6 | (1,377 | ) | – | (4,000 | ) | – | |||||||
Profit (loss) on derivative instruments - net | 8,108 | (1,373 | ) | 7,610 | (16,205 | ) | ||||||||
Loss before income taxes | (19,756 | ) | (287 | ) | (37,196 | ) | (20,178 | ) | ||||||
Income tax expense | (2,234 | ) | (764 | ) | (2,564 | ) | (1,214 | ) | ||||||
Net loss for the period | (21,990 | ) | (1,051 | ) | (39,760 | ) | (21,392 | ) | ||||||
Basic and diluted loss per share | (0.04 | ) | (0.00 | ) | (0.08 | ) | (0.05 | ) | ||||||
Weighted average number of common shares outstanding (thousands) | 551,997 | 454,559 | 514,231 | 443,155 |
The accompanying notes are an integral part of these consolidated financial statements
2
GREAT BASIN GOLD LTD. | ||||||||||||
Consolidated Statements of Comprehensive Loss | ||||||||||||
Expressed in thousands of Canadian dollars | ||||||||||||
Three months ended | Six months ended | |||||||||||
June 30 | June 30 | |||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||
$ '000 | $ '000 | $ '000 | $ '000 | |||||||||
Net loss for the period | (21,990 | ) | (1,051 | ) | (39,760 | ) | (21,392 | ) | ||||
Other comprehensive loss | ||||||||||||
Cumulative translation adjustment | (25,300 | ) | (3,307 | ) | (6,346 | ) | (29,956 | ) | ||||
Other comprehensive loss for the period | (25,300 | ) | (3,307 | ) | (6,346 | ) | (29,956 | ) | ||||
Comprehensive loss for the period | (47,290 | ) | (4,358 | ) | (46,106 | ) | (51,348 | ) |
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 | ||||||||
June 30 | December 31 | |||||||
Note | 2012 | 2011 | ||||||
$ '000 | $ '000 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | 16,655 | 25,749 | ||||||
Trade and other receivables | 7,075 | 14,060 | ||||||
Inventories | 5 | 31,032 | 19,694 | |||||
Other current assets | 981 | 2,404 | ||||||
55,743 | 61,907 | |||||||
Non-current assets | ||||||||
Inventories | 5 | 7,603 | 7,998 | |||||
Loan due from related party | 6 | 2,143 | 3,784 | |||||
Property, plant and equipment | 7 | 765,276 | 720,213 | |||||
Other assets | 6,135 | 5,327 | ||||||
Deferred income tax assets | 51,136 | 51,081 | ||||||
Total assets | 888,036 | 850,310 | ||||||
Liabilities | ||||||||
Current liabilities | ||||||||
Trade and other payables | 77,548 | 56,038 | ||||||
Current portion of long term debt | 8 | 24,221 | 20,371 | |||||
Current portion of other liabilities | 9 | 3,240 | 3,050 | |||||
105,009 | 79,459 | |||||||
Non-current liabilities | ||||||||
Long term debt | 8 | 268,929 | 262,075 | |||||
Other liabilities | 9 | 23,451 | 31,197 | |||||
Site reclamation obligations | 6,023 | 6,011 | ||||||
Total liabilities | 403,412 | 378,742 | ||||||
Equity | ||||||||
Share capital | 10 (b) | 883,165 | 833,643 | |||||
Warrants | 10 (b) | 4,324 | - | |||||
Contributed surplus | 88,653 | 83,337 | ||||||
Accumulated other comprehensive loss | (80,110 | ) | (73,764 | ) | ||||
Deficit | (411,408 | ) | (371,648 | ) | ||||
Total equity | 484,624 | 471,568 | ||||||
Total liabilities and equity | 888,036 | 850,310 |
The accompanying notes are an integral part of these consolidated financial statements
Approved by the Board of Directors
/s/ Lou van Vuuren | /s/ Ronald W. Thiessen |
Lou van Vuuren | Ronald W. Thiessen |
Interim Chief Executive Officer | Director |
4
GREAT BASIN GOLD LTD. | ||||||||||||||||||
Consolidated Statements of Changes in Equity | ||||||||||||||||||
For the six months ended June 30, 2012 and 2011 | ||||||||||||||||||
Expressed in thousands of Canadian dollars |
Accumulated | ||||||||||||||||||
other | ||||||||||||||||||
Contributed | comprehensive | |||||||||||||||||
Share capital | Warrants | surplus | loss | 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 | - | - | - | (6,346 | ) | (39,760 | ) | (46,106 | ) | |||||||||
Net loss for the period | - | - | - | - | (39,760 | ) | (39,760 | ) | ||||||||||
Other comprehensive loss | - | - | - | (6,346 | ) | - | (6,346 | ) | ||||||||||
Employee share options | ||||||||||||||||||
Value of services recognized (note 10(c)) | - | - | 5,316 | - | - | 5,316 | ||||||||||||
Proceeds on issuance of units in public offering (net of transaction costs) (note 10(b)) | 49,522 | 4,324 | - | - | - | 53,846 | ||||||||||||
Balance - June 30, 2012 | 883,165 | 4,324 | 88,653 | (80,110 | ) | (411,408 | ) | 484,624 | ||||||||||
Balance - January 1, 2011 | 709,449 | 6,108 | 77,676 | 26,395 | (353,911 | ) | 465,717 | |||||||||||
Comprehensive loss for the period | - | - | - | (29,956 | ) | (21,392 | ) | (51,348 | ) | |||||||||
Net loss for the period | - | - | - | - | (21,392 | ) | (21,392 | ) | ||||||||||
Other comprehensive loss | - | - | - | (29,956 | ) | - | (29,956 | ) | ||||||||||
Employee share options | ||||||||||||||||||
Value of services recognized (note 10(c)) | - | - | 4,965 | - | - | 4,965 | ||||||||||||
Proceeds on issuing shares | 4,206 | - | (1,574 | ) | - | - | 2,632 | |||||||||||
Warrants | ||||||||||||||||||
Proceeds on issuing shares | 22,426 | (3,793 | ) | - | - | - | 18,633 | |||||||||||
Proceeds on issuance of shares in public offering (net of transaction costs) | 81,190 | - | - | - | - | 81,190 | ||||||||||||
Other | 163 | - | - | - | - | 163 | ||||||||||||
Balance - June 30, 2011 | 817,434 | 2,315 | 81,067 | (3,561 | ) | (375,303 | ) | 521,952 |
The accompanying notes are an integral part of these consolidated financial statements
5
GREAT BASIN GOLD LTD. | ||||||||||||
Consolidated Statements of Cash Flows | ||||||||||||
Expressed in thousands of Canadian dollars | ||||||||||||
Three months ended | Six months ended | |||||||||||
June 30 | June 30 | |||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||
$ '000 | $ '000 | $ '000 | $ '000 | |||||||||
Operating activities | ||||||||||||
Loss for the period | (21,990 | ) | (1,051 | ) | (39,760 | ) | (21,392 | ) | ||||
Items not involving cash | ||||||||||||
Production non-cash charges | 1,022 | 797 | 1,848 | 967 | ||||||||
Depletion | 1,137 | 1,856 | 2,197 | 2,990 | ||||||||
Depreciation | 4,190 | 6,160 | 7,730 | 7,554 | ||||||||
Exploration non-cash charges | 10 | 32 | 30 | 91 | ||||||||
Pre-development non-cash charges | 250 | (13 | ) | 519 | 375 | |||||||
Unrealized foreign exchange loss (gain) | 3,296 | (446 | ) | 193 | (3,258 | ) | ||||||
Share based payments expense | 1,757 | 1,574 | 2,776 | 3,015 | ||||||||
Impairment of loan due from related party | 1,377 | – | 4,000 | – | ||||||||
(Profit) loss on derivative instruments - net | (8,108 | ) | 1,419 | (7,610 | ) | 16,221 | ||||||
Share donation | – | 163 | – | 163 | ||||||||
Adjusted for | ||||||||||||
Interest expense | 7,272 | 6,126 | 14,363 | 11,197 | ||||||||
Interest income | (426 | ) | (404 | ) | (848 | ) | (793 | ) | ||||
Changes in non-cash operating working capital | ||||||||||||
Trade and other receivables | (2,674 | ) | (2,362 | ) | 6,837 | (578 | ) | |||||
Other current assets | 1,238 | 398 | 1,409 | 581 | ||||||||
Inventories | (4,620 | ) | 830 | (11,122 | ) | (7,710 | ) | |||||
Trade and other payables | 19,836 | 8,676 | 21,570 | 4,850 | ||||||||
Net cash generated from operating activities | 3,567 | 23,755 | 4,132 | 14,273 | ||||||||
Investing activities | ||||||||||||
Advance to related party | (1,096 | ) | (1,468 | ) | (1,727 | ) | (1,468 | ) | ||||
Purchase of property, plant and equipment | (32,635 | ) | (56,657 | ) | (61,452 | ) | (93,191 | ) | ||||
Interest income | 103 | 152 | 210 | 322 | ||||||||
Reclamation deposits | (628 | ) | (99 | ) | (770 | ) | (460 | ) | ||||
Net cash utilized by investing activities | (34,256 | ) | (58,072 | ) | (63,739 | ) | (94,797 | ) | ||||
Financing activities | ||||||||||||
Common shares and warrants issued for cash, net of issue costs | 6,888 | 14,338 | 53,845 | 102,455 | ||||||||
Proceeds on issuance of debt | 10,029 | – | 19,986 | 68,810 | ||||||||
Repayment of debt | (6,010 | ) | (2,069 | ) | (14,746 | ) | (55,755 | ) | ||||
Interest expense | (7,363 | ) | (7,912 | ) | (9,347 | ) | (9,040 | ) | ||||
Net cash generated from financing activities | 3,544 | 4,357 | 49,738 | 106,470 | ||||||||
(Decrease) increase in cash and cash equivalents | (27,145 | ) | (29,960 | ) | (9,869 | ) | 25,946 | |||||
Cash and cash equivalents, beginning of period | 43,548 | 68,018 | 25,749 | 12,855 | ||||||||
Foreign exchange movement on cash and cash equivalents | 252 | 713 | 775 | (30 | ) | |||||||
Cash and cash equivalents, end of period | 16,655 | 38,771 | 16,655 | 38,771 |
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 and six months ended June 30, 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 and six month periods ended June 30, 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 periods presented. | |
2. | Basis of preparation |
The interim consolidated financial statements for the three and six months ended June 30, 2012 have 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”). The working capital deficit at June 30, 2012, indicates an uncertainty which may cast substantial doubt about the company's ability to continue as a going concern. See note 13 which details the strategic alternatives being considered by management together with managements’ basis for continuing to adopt the going concern assumption as a basis for preparing the interim consolidated financial statements. | |
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 August 13, 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 and six months ended June 30, 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. In addition, see note 13 which details the strategic alternatives being considered by management together with managements' basis for continuing to adopt the going concern assumption as a basis for preparing the interim consolidated financial statements. | |
5. | Inventories |
June 30 | December 31 | ||||||
2012 | 2011 | ||||||
$ ‘000 | $ ‘000 | ||||||
Stores and materials | 4,255 | 4,699 | |||||
Unprocessed ore | 2,688 | 2,437 | |||||
Precious metals in process | 31,692 | 20,556 | |||||
38,635 | 27,692 | ||||||
Non-current | 7,603 | 7,998 | |||||
Current | 31,032 | 19,694 | |||||
38,635 | 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 Company recognized cost of inventories of $35 million (2011: $38 million) and $67 million (2011: $54 million) as cost of operations expenses during the three and six months ended June 30, 2012 respectively. | |
Inventories including unprocessed ore and precious metals in process of $4.5 million are carried at net realizable value (2011: $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 |
June 30 | December 31 | ||||||
2012 | 2011 | ||||||
$’000 | $’000 | ||||||
Balance, beginning of the period | 3,784 | 13,372 | |||||
Cash advances | 1,727 | 4,506 | |||||
Interest earned | 638 | 1,000 | |||||
Impairment provision | (4,000 | ) | (13,680 | ) | |||
Foreign exchange | (6 | ) | (1,414 | ) | |||
Balance, end of the period | 2,143 | 3,784 |
8
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and six months ended June 30, 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 $16.9 million (ZAR 136 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 June 30, 2012, is $0.5 million (ZAR4 million) (2011: $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 $1.4 million (ZAR11.2 million) and $4 million (ZAR31.5 million) during the three and six months ended June 30, 2012 respectively. These are in addition to the $13.7 million (ZAR100 million) impairment provision raised against the loan to provide for its exposure to potential future repayment losses in quarter 4 of 2011. | |
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 June 30, 2012 | ||||||||||||||||||
At January 1, 2012 | 164,854 | 460,320 | 40,131 | 47,141 | 7,767 | 720,213 | ||||||||||||
Additions | - | 30,131 | 299 | 34,298 | 195 | 64,923 | ||||||||||||
Transfers | - | 3,190 | 2,204 | (5,496 | ) | 102 | - | |||||||||||
Depletion and depreciation | (2,601 | ) | (3,529 | ) | (6,091 | ) | - | (777 | ) | (12,998 | ) | |||||||
Foreign exchange differences | (696 | ) | (5,014 | ) | (294 | ) | (798 | ) | (60 | ) | (6,862 | ) | ||||||
At June 30, 2012 | 161,557 | 485,098 | 36,249 | 75,145 | 7,227 | 765,276 | ||||||||||||
At June 30, 2012 | ||||||||||||||||||
Cost | 184,757 | 499,142 | 66,435 | 75,145 | 12,174 | 837,653 | ||||||||||||
Accumulated depreciation | (23,200 | ) | (14,044 | ) | (30,186 | ) | - | (4,947 | ) | (72,377 | ) | |||||||
Net book value | 161,557 | 485,098 | 36,249 | 75,145 | 7,227 | 765,276 |
9
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and six months ended June 30, 2012 and 2011 |
7. | Property, plant and equipment (continued) |
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 $2.3 million relating to stockpiled tons and ounces in process was capitalized to the value of the unprocessed ore and precious metals in process at June 30, 2012 (2011: $2.4 million) (refer note 5).
Mineral properties of $116.2 million consisting of the Hollister, Esmeralda and Burnstone properties and fixed assets of $603 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).
June 30 | December 31 | ||||||
2012 | 2011 | ||||||
$’000 | $’000 | ||||||
Cost | 1,121 | 5,451 | |||||
Accumulated depreciation | (224 | ) | (981 | ) | |||
Net book value | 897 | 4,470 |
8. | Long term debt |
Non-current portion of long term debt |
June 30 | December 31 | ||||||
2012 | 2011 | ||||||
$ ‘000 | $ ‘000 | ||||||
Convertible debentures | 101,563 | 97,669 | |||||
Finance lease liabilities | 46 | 71 | |||||
Term loan I (note 8(a)) | 135,901 | 125,879 | |||||
Term loan II (note 8(b)) | 31,419 | 38,456 | |||||
268,929 | 262,075 |
10
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and six months ended June 30, 2012 and 2011 |
8. | Long term debt (continued) |
Current portion of long term debt |
June 30 | December 31 | ||||||
2012 | 2011 | ||||||
$ ‘000 | $ ‘000 | ||||||
Convertible debentures | 843 | 843 | |||||
Finance lease liabilities | 519 | 2,902 | |||||
Term loan I (note 8(a)) | 10,872 | 280 | |||||
Term loan II (note 8(b)) | 11,987 | 16,346 | |||||
24,221 | 20,371 |
The continuity of long term debt is as follows:
June 30 | December 31 | ||||||
2012 | 2011 | ||||||
$ ‘000 | $ ‘000 | ||||||
Balance, beginning of the period | 282,446 | 209,578 | |||||
New debt | 19,986 | 135,321 | |||||
New leases | - | 1,989 | |||||
Transaction cost | (260 | ) | (6,525 | ) | |||
Repayment of debt and interest | (23,570 | ) | (94,010 | ) | |||
Settlement loss on senior secured notes | - | 8,817 | |||||
Amortized transaction cost | 881 | 1,231 | |||||
Interest expense | 13,220 | 25,476 | |||||
Foreign exchange | 447 | 569 | |||||
Balance, end of the period | 293,150 | 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) of the restructured facility was drawn down on December 15, 2011, with the remaining $20 million (US$20 million) drawn down during the six months ended June 30, 2012.
Term loan I has a maximum term of 5 years from the December 15, 2011 draw down and capital will be repaid in 16 quarterly consecutive installments, commencing on March 15, 2013. The interest rate for Term loan I is linked to the US$ 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 June 30, 2012 is 4.46785% (USD LIBOR of 0.46785% 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 June 30, 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 and six months ended June 30, 2012 and 2011 |
8. | Long term debt (continued) |
(b) Term loan II | |
Term loan II is being repaid in 14 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 June 30, 2012 is 4.21785% (USD LIBOR of 0.46785% 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 June 30, 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 | |||||||
June 30 | December 31 | ||||||
2012 | 2011 | ||||||
$ ‘000 | $ ‘000 | ||||||
Zero cost collar program I (note 9(a)) | 13,793 | 17,834 | |||||
Zero cost collar program II (note 9(b)) | 9,658 | 13,363 | |||||
23,451 | 31,197 |
Current portion of other liabilities | |||||||
June 30 | December 31 | ||||||
2012 | 2011 | ||||||
$ ‘000 | $ ‘000 | ||||||
Financial guarantee | 2,143 | 2,165 | |||||
Zero cost collar program I (note 9(a)) | 512 | 666 | |||||
Zero cost collar program II (note 9(b)) | 585 | 219 | |||||
3,240 | 3,050 |
The continuity of other liabilities is as follows: | |||||||
June 30 | 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 | (7,556 | ) | (3,814 | ) | |||
Foreign exchange | - | 447 | |||||
Balance, end of the period | 26,691 | 34,247 |
12
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and six months ended June 30, 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 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 June 30, 2012 were calculated using an option pricing model with inputs based on the following assumptions: |
June 30 | December 31 | ||||||
2012 | 2011 | ||||||
Gold price (per ounce) | US$1,599 | US$1,564 | |||||
Risk free interest rate | 0.31% - 0.96% | 0.33% - 1.285% | |||||
Expected life | 1 - 54 months | 1 – 60 months | |||||
Gold price volatility | 18.08% - 27.50% | 20.35% - 32% |
Gold delivery positions as at June 30, 2012: | |||||||
June 30 | December 31 | ||||||
2012 | 2011 | ||||||
Expired unexercised at no cost | 7,776 ounces | Nil ounces | |||||
Delivered | Nil ounces | Nil ounces | |||||
Remaining positions | 157,698 ounces | 165,474 ounces |
(b) Zero cost collar program II
In connection with Term loan II (refer note 8(b)), the Company executed a zero cost collar hedge program for a total 117,500 gold ounces over a period of four years that commenced in January 2012.
The marked-to-market movements until June 30, 2012 were calculated using an option pricing model with inputs based on the following assumptions:
June 30 | December 31 | ||||||
2012 | 2011 | ||||||
Gold price (per ounce) | US$1,599 | US$1,564 | |||||
Risk free interest rate | 0.31% - 0.79% | 0.33% - 1.06% | |||||
Expected life | 1 - 42 months | 1 - 48 months | |||||
Gold price volatility | 18.08% - 26.51% | 20.35% - 30.76% |
Gold delivery positions as at June 30, 2012: | |||||||
June 30 | December 31 | ||||||
2012 | 2011 | ||||||
Expired unexercised at no cost | 5,250 ounces | Nil ounces | |||||
Delivered | Nil ounces | Nil ounces | |||||
Remaining positions | 112,250 ounces | 117,500 ounces |
13
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and six months ended June 30, 2012 and 2011 |
9. | Other liabilities (continued) |
(c) Classification
The fair values of the derivative instruments as of June 30, 2012 are as follows:
Asset | Liability | Net | ||||||||||
derivatives | derivatives | derivatives | ||||||||||
Estimated | Estimated | Estimated | ||||||||||
Derivatives not designated as hedging instruments | Statement of financial position classification | fair value $’000 | fair value $’000 | fair value $’000 | ||||||||
Commodity contracts (gold) – ZCC 1 | Other liabilities | 10,446 | (24,239 | ) | (13,793 | ) | ||||||
Commodity contracts (gold) – ZCC 2 | Other liabilities | 2,707 | (12,365 | ) | (9,658 | ) | ||||||
13,153 | (36,604 | ) | (23,451 | ) | ||||||||
Commodity contracts (gold) – ZCC 1 | Current other liabilities | 5 | (517 | ) | (512 | ) | ||||||
Commodity contracts (gold) – ZCC 2 | Current other liabilities | 28 | (613 | ) | (585 | ) | ||||||
33 | (1,130 | ) | (1,097 | ) |
(d) Gold delivery positions
The Company’s gold delivery positions as at June 30, 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 | 13,536 | - | - | - | - | 13,536 | ||||||||||||||
ZCC – 1 | $ | 950 | - | 28,506 | - | - | - | 28,506 | ||||||||||||||
ZCC – 1 | $ | 1,200 | - | - | 34,008 | 39,768 | 41,880 | 115,656 | ||||||||||||||
ZCC – 2 | $ | 1,050 | 5,250 | 36,000 | 36,000 | 35,000 | - | 112,250 | ||||||||||||||
18,786 | 64,506 | 70,008 | 74,768 | 41,880 | 269,948 |
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 | 6,768 | 14,253 | 17,004 | 19,884 | 20,940 | 78,849 | ||||||||||||||
ZCC – 1 | $ | 1,930 | 6,768 | 14,253 | 17,004 | 19,884 | 20,940 | 78,849 | ||||||||||||||
ZCC – 2 | $ | 1,930 | 5,250 | 36,000 | 36,000 | 35,000 | - | 112,250 | ||||||||||||||
18,786 | 64,506 | 70,008 | 74,768 | 41,880 | 269,948 |
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 and six months ended June 30, 2012 and 2011 |
10. | Share capital (continued) |
(b) Public offering, March and April 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. On April 5, 2012, the Company issued a further 10 million Units for proceeds of $7.5 million upon closing the offering’s overallotment. 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 38,352,500 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 $2.9 million and incurred other share issue costs of approximately $0.64 million. Net proceeds of $49.5 million and $4.3 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 | $ 0.95 | 12,490 | |||||||
Cancelled | $ 1.71 | (20,270 | ) | ||||||
Replaced | $ 0.75 | 10,135 | |||||||
Expired | $ 1.82 | (1,227 | ) | ||||||
Forfeited | $ 1.73 | (2,309 | ) | ||||||
$ 0.83 | 16,777 | 3.70 |
Directors, employees and certain consultants were allowed to cancel unexercised employee and non-employee stock options and receive new options equal to 50% of the cancelled options at an exercise price of $0.75 and vesting period of 24 months. The cancellation of these options was concluded on June 7, 2012.
The cancelled options were accounted for as cancellations in accordance with IFRS 2 where any carry forward cost not yet recognized was recognized immediately in the statement of operations. The new options issued were accounted for as modifications in accordance with IFRS 2, where the incremental value was recorded as additional cost measured by the difference between the fair value of the cancelled options calculated on the modification date and the value of the replacement options at the modification date. The amount is recognized over the vesting period of the replacement option. Any remaining compensation cost for as yet unvested cancelled options is also recognized over the new vesting period.
As at June 30, 2012, 1.2 million of the outstanding options were exercisable at an average exercise price of $1.87 per option and expiry dates ranging between March 26, 2013 and March 26, 2015.
15
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and six months ended June 30, 2012 and 2011 |
10. | Share capital (continued) |
(c) Share option plan (continued)
On June 1, 2012, 677,766 out of plan options expired unexercised. These options were issued with the acquisition of mineral properties in 2008.
Costs previously recognized on options were, upon forfeiture, reversed through the current period’s consolidated statement of loss.
The exercise prices of all share purchase options granted during the three and six months ended June 30, 2012 and 2011 were at or above the market price at the grant date.
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 consolidated statement of loss for the three and six months ended June 30, 2012, is as follows:
Three months ended June 30 | |||||||
2012 | 2011 | ||||||
$ ‘000 | $ ‘000 | ||||||
Total compensation cost recognized, credited to contributed surplus | 3,374 | 3,095 | |||||
Compensation cost allocated to production cost | (1,617 | ) | (1,521 | ) | |||
Share based payments expense | 1,757 | 1,574 |
Six months ended June 30 | |||||||
2012 | 2011 | ||||||
$ ‘000 | $ ‘000 | ||||||
Total compensation cost recognized, credited to contributed surplus | 5,316 | 4,965 | |||||
Compensation cost allocated to production cost | (2,540 | ) | (1,854 | ) | |||
Compensation cost capitalized on Burnstone mine development | - | (96 | ) | ||||
Share based payments expense | 2,776 | 3,015 |
The weighted-average assumptions used to estimate the fair value of options granted during the respective periods were as follows:
Three months ended | Six months ended | ||||||||||||
June 30 | June 30 | ||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||
Risk free interest rate | 1.86% | 3% | 1.79% | 2.68% | |||||||||
Expected life | 3.9 years | 5 years | 3.6 years | 3.6 years | |||||||||
Expected volatility | 67% | 74.2% | 64.21% | 81% | |||||||||
Expected dividends | Nil | Nil | Nil | Nil |
11. | Additional cash flow information |
Supplementary information | |||||||
Three months ended June 30 | |||||||
2012 | 2011 | ||||||
$’000 | $’000 | ||||||
Income taxes paid | - | 2 | |||||
Non-cash investing activities: | |||||||
Depreciation capitalized to property, plant and machinery (note 7) | 1,806 | 1,569 |
16
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and six months ended June 30, 2012 and 2011 |
11. | Additional cash flow information (continued) |
Supplementary information (continued) | |||||||
Three months ended June 30 | |||||||
2012 | 2011 | ||||||
$’000 | $’000 | ||||||
Non-cash financing activities: | |||||||
Fair value of stock options transferred to share capital from contributed surplus on options exercised | - | 762 | |||||
Fair value of warrants transferred to share capital on warrants exercised | - | 2,727 |
Six months ended June 30 | |||||||
2012 | 2011 | ||||||
$’000 | $’000 | ||||||
Income taxes paid | - | 2 | |||||
Non-cash investing activities: | |||||||
Depreciation capitalized to property, plant and machinery (note 7) | 3,463 | 2,318 | |||||
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 | - | 1,574 | |||||
Fair value of warrants transferred to share capital on warrants exercised | - | 3,793 |
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. |
17
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and six months ended June 30, 2012 and 2011 |
12. | Segment disclosure (continued) |
Segment statement of income – three months ended June 2012 |
North | South | |||||||||||||||
American | African | Tanzanian | ||||||||||||||
operations | operations | operations | Other1 | Total | ||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | ||||||||||||
Revenue | 23,111 | 9,260 | - | - | 32,371 | |||||||||||
Cost of operations | ||||||||||||||||
Production cost | (16,542 | ) | (13,623 | ) | - | - | (30,165 | ) | ||||||||
Depletion charge | (1,086 | ) | (51 | ) | - | - | (1,137 | ) | ||||||||
Depreciation charge | (993 | ) | (3,050 | ) | - | - | (4,043 | ) | ||||||||
Expenses | ||||||||||||||||
Exploration expenses | (2,226 | ) | (71 | ) | (308 | ) | - | (2,605 | ) | |||||||
Pre-development expenses | (5,009 | ) | - | - | - | (5,009 | ) | |||||||||
Corporate and administrative cost | - | (22 | ) | (34 | ) | (1,410 | ) | (1,466 | ) | |||||||
Environmental impact study | (362 | ) | - | - | - | (362 | ) | |||||||||
Foreign exchange gain (loss) | - | 47 | (4 | ) | (3,375 | ) | (3,332 | ) | ||||||||
Salaries and compensation | ||||||||||||||||
Salaries and wages | - | - | - | (2,136 | ) | (2,136 | ) | |||||||||
Share based compensation | - | - | - | (1,757 | ) | (1,757 | ) | |||||||||
Loss from operating activities | (3,107 | ) | (7,510 | ) | (346 | ) | (8,678 | ) | (19,641 | ) | ||||||
Interest expense | (728 | ) | (2,004 | ) | - | (4,540 | ) | (7,272 | ) | |||||||
Interest income | - | 394 | - | 32 | 426 | |||||||||||
Net interest expense | (728 | ) | (1,610 | ) | - | (4,508 | ) | (6,846 | ) | |||||||
Loss from operating activitiesafter net interest | (3,835 | ) | (9,120 | ) | (346 | ) | (13,186 | ) | (26,487 | ) | ||||||
Impairment of loan due from related party | - | - | - | (1,377 | ) | (1,377 | ) | |||||||||
Profit on derivative instruments – net | 2,452 | 5,656 | - | - | 8,108 | |||||||||||
Loss before income taxes | (1,383 | ) | (3,464 | ) | (346 | ) | (14,563 | ) | (19,756 | ) | ||||||
Income tax expense | (2,234 | ) | - | - | - | (2,234 | ) | |||||||||
Net loss for the period | (3,617 | ) | (3,464 | ) | (346 | ) | (14,563 | ) | (21,990 | ) |
1 Corporate entities
18
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and six months ended June 30, 2012 and 2011 |
12. | Segment disclosure (continued) |
Segment statement of income – three months ended June 2011 |
North | South | |||||||||||||||
American | African | Tanzanian | ||||||||||||||
operations | operations | operations | Other1 | Total | ||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | ||||||||||||
Revenue | 48,686 | 8,052 | - | - | 56,738 | |||||||||||
Cost of operations | ||||||||||||||||
Production cost | (20,839 | ) | (8,433 | ) | - | - | (29,272 | ) | ||||||||
Depletion charge | (1,615 | ) | (241 | ) | - | - | (1,856 | ) | ||||||||
Depreciation charge | (1,258 | ) | (4,726 | ) | - | - | (5,984 | ) | ||||||||
Expenses | ||||||||||||||||
Exploration expenses | (3,063 | ) | (83 | ) | (297 | ) | - | (3,443 | ) | |||||||
Pre-development expenses | (3,686 | ) | - | - | - | (3,686 | ) | |||||||||
Corporate and administrative cost | - | - | (255 | ) | (1,915 | ) | (2,170 | ) | ||||||||
Environmental impact study | (488 | ) | - | - | - | (488 | ) | |||||||||
Foreign exchange (loss) gain | - | - | (6 | ) | 720 | 714 | ||||||||||
Salaries and compensation | ||||||||||||||||
Salaries and wages | - | - | - | (2,171 | ) | (2,171 | ) | |||||||||
Share based compensation | - | - | - | (1,574 | ) | (1,574 | ) | |||||||||
Profit (loss) from operating activities | 17,737 | (5,431 | ) | (558 | ) | (4,940 | ) | 6,808 | ||||||||
Interest expense | (656 | ) | (1,245 | ) | - | (4,225 | ) | (6,126 | ) | |||||||
Interest income | - | 340 | - | 64 | 404 | |||||||||||
Net interest expense | (656 | ) | (905 | ) | - | (4,161 | ) | (5,722 | ) | |||||||
Profit (loss) from operatingactivities after net interest | 17,081 | (6,336 | ) | (558 | ) | (9,101 | ) | 1,086 | ||||||||
(Loss) profit on derivative instruments – net | (1,226 | ) | (147 | ) | - | - | (1,373 | ) | ||||||||
Profit (loss) before income taxes | 15,855 | (6,483 | ) | (558 | ) | (9,101 | ) | (287 | ) | |||||||
Income tax expense | (764 | ) | - | - | - | (764 | ) | |||||||||
Net profit (loss) for the period | 15,091 | (6,483 | ) | (558 | ) | (9,101 | ) | (1,051 | ) |
1 Corporate entities
19
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and six months ended June 30, 2012 and 2011 |
12. | Segment disclosure (continued) |
Segment statement of income – six months ended June 2012 |
North | South | |||||||||||||||
American | African | Tanzanian | ||||||||||||||
operations | operations | operations | Other1 | Total | ||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | ||||||||||||
Revenue | 46,164 | 19,580 | - | - | 65,744 | |||||||||||
Cost of operations | ||||||||||||||||
Production cost | (29,584 | ) | (27,652 | ) | - | - | (57,236 | ) | ||||||||
Depletion charge | (2,090 | ) | (107 | ) | - | - | (2,197 | ) | ||||||||
Depreciation charge | (1,963 | ) | (5,467 | ) | - | - | (7,430 | ) | ||||||||
Expenses | ||||||||||||||||
Exploration expenses | (3,891 | ) | (189 | ) | (639 | ) | - | (4,719 | ) | |||||||
Pre-development expenses | (9,751 | ) | - | - | - | (9,751 | ) | |||||||||
Corporate and administrative cost | - | (46 | ) | (58 | ) | (2,942 | ) | (3,046 | ) | |||||||
Environmental impact study | (882 | ) | - | - | - | (882 | ) | |||||||||
Foreign exchange gain (loss) | - | 92 | (5 | ) | (510 | ) | (423 | ) | ||||||||
Salaries and compensation | ||||||||||||||||
Salaries and wages | - | - | - | (4,575 | ) | (4,575 | ) | |||||||||
Share based compensation | - | - | - | (2,776 | ) | (2,776 | ) | |||||||||
Loss from operating activities | (1,997 | ) | (13,789 | ) | (702 | ) | (10,803 | ) | (27,291 | ) | ||||||
Interest expense | (1,766 | ) | (3,641 | ) | - | (8,956 | ) | (14,363 | ) | |||||||
Interest income | - | 807 | - | 41 | 848 | |||||||||||
Net interest expense | (1,766 | ) | (2,834 | ) | - | (8,915 | ) | (13,515 | ) | |||||||
Loss from operating activitiesafter net interest | (3,763 | ) | (16,623 | ) | (702 | ) | (19,718 | ) | (40,806 | ) | ||||||
Impairment of loan due from related party | - | - | - | (4,000 | ) | (4,000 | ) | |||||||||
Profit on derivative instruments – net | 3,313 | 4,297 | - | - | 7,610 | |||||||||||
Loss before income taxes | (450 | ) | (12,326 | ) | (702 | ) | (23,718 | ) | (37,196 | ) | ||||||
Income tax expense | (2,564 | ) | - | - | - | (2,564 | ) | |||||||||
Net loss for the period | (3,014 | ) | (12,326 | ) | (702 | ) | (23,718 | ) | (39,760 | ) |
1 Corporate entities
20
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and six months ended June 30, 2012 and 2011 |
12. | Segment disclosure (continued) |
Segment statement of income – six months ending June 2011 |
North | South | |||||||||||||||
American | African | Tanzanian | ||||||||||||||
operations | operations | operations | Other1 | Total | ||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | ||||||||||||
Revenue | 71,195 | 11,886 | - | - | 83,081 | |||||||||||
Cost of operations | ||||||||||||||||
Production cost | (32,078 | ) | (10,890 | ) | - | - | (42,968 | ) | ||||||||
Depletion charge | (2,720 | ) | (270 | ) | - | - | (2,990 | ) | ||||||||
Depreciation charge | (1,986 | ) | (5,212 | ) | - | - | (7,198 | ) | ||||||||
Expenses | ||||||||||||||||
Exploration expenses | (5,498 | ) | (207 | ) | (639 | ) | - | (6,344 | ) | |||||||
Pre-development expenses | (7,425 | ) | - | - | - | (7,425 | ) | |||||||||
Corporate and administrative cost | - | - | (306 | ) | (4,146 | ) | (4,452 | ) | ||||||||
Environmental impact study | (925 | ) | - | - | - | (925 | ) | |||||||||
Foreign exchange (loss) gain | - | - | (12 | ) | 3,189 | 3,177 | ||||||||||
Salaries and compensation | ||||||||||||||||
Salaries and wages | - | - | - | (4,510 | ) | (4,510 | ) | |||||||||
Share based compensation | - | - | - | (3,015 | ) | (3,015 | ) | |||||||||
Profit (loss) from operating activities | 20,563 | (4,693 | ) | (957 | ) | (8,482 | ) | 6,431 | ||||||||
Interest expense | (812 | ) | (2,515 | ) | - | (7,870 | ) | (11,197 | ) | |||||||
Interest income | - | 708 | - | 85 | 793 | |||||||||||
Net interest expense | (812 | ) | (1,807 | ) | - | (7,785 | ) | (10,404 | ) | |||||||
Profit (loss) from operatingactivities after net interest | 19,751 | (6,500 | ) | (957 | ) | (16,267 | ) | (3,973 | ) | |||||||
(Loss) profit on derivative instruments – net | (9,677 | ) | 2,289 | - | (8,817 | ) | (16,205 | ) | ||||||||
Profit (loss) before income taxes | 10,074 | (4,211 | ) | (957 | ) | (25,084 | ) | (20,178 | ) | |||||||
Income tax expense | (1,214 | ) | - | - | - | (1,214 | ) | |||||||||
Net profit (loss) for the period | 8,860 | (4,211 | ) | (957 | ) | (25,084 | ) | (21,392 | ) |
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 | ||||||||||||
June 30, 2012 | $’000 | $’000 | $’000 | $’000 | $’000 | |||||||||||
Total assets | 178,640 | 647,762 | 45,198 | 16,436 | 888,036 | |||||||||||
Total liabilities | 104,933 | 193,215 | 114 | 105,150 | 403,412 |
1 Corporate entities
21
GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and six months ended June 30, 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 | ||||||||||||
June 30, 2012 | 3,494 | 61,343 | - | 86 | 64,923 | |||||||||||
December 31, 2011 | 7,353 | 143,641 | (117 | ) | 89 | 150,966 |
1 Corporate entities
2 Additions to non-current assets exclude financial instruments and deferred tax assets
13. | Liquidity |
The operational performance from the Nevada and South African operations resulted in a working capital deficit of approximately $23 million on June 30, 2012. The Board of Directors has recently initiated a review process to consider a range of strategic alternatives with a view to preserving and enhancing shareholder value in light of the continuing financial challenges. Strategic alternatives are likely to include, but are not limited to, the sale of all or a portion of the Company's assets, a merger or other business combination transaction involving a third party acquiring all of the Company, a capital raising, recapitalization, reorganization, or restructuring of the Company, as well as continued execution of the Company's existing business plan, or some combination of these alternatives. The Company is also working with its lenders to potentially restructure the current term loan facilities to improve the Company’s cash flow in the short to medium term. | |
In assessing whether the Company was a going concern management was cognizant of the near term liquidity challenges. However after assessing the carrying value of the principal assets management concluded that the realizable value of the Company’s aggregate assets continues to exceed aggregate liabilities by a significant margin. Given the residual shareholders’ equity in the business, management believes that a solution to the liquidity issue is more likely than not and hence has concluded in favour of going concern treatment. |
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GREAT BASIN GOLD LTD. |
Notes to the Consolidated Financial Statements |
For the three and six months ended June 30, 2012 and 2011 |
14. | Subsequent events |
Subsequent to June 30, 2012
(a) 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. Finalization of this restructured financial support is being delayed as a result of the strategic review process the Company has initiated.
Refer to note 6 for information on the loan advanced to Tranter.
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