| Tue 3 Apr 2007, 11:42 | | GBG - Great Basin - Audited consolidated financial |
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GBG
GBG
GBG - Great Basin - Audited consolidated financial results: year ended 31
December 2006
GREAT BASIN GOLD LIMITED
(Incorporated in Canada and registered as an External Company in South Africa)
(Registration No. 2006/021304/10)
Share Code: GBG ISIN Number: CA3901241057
("Great Basin" or "the Company")
AUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006
Consolidated Balance Sheets
(Expressed in Canadian Dollars)
December 31 December 31
2006 2005
$ $
Assets
Current assets
Cash and equivalents 33,964,436 17,516,909
Amounts receivable 426,349 208,762
Inventory 53,437 -
Due from related parties 173,455 -
Investments - 179,000
Prepaid expenses 539,991 85,164
35,157,668 17,989,835
Equipment 1,472,501 6,080
Reclamation deposits 103,702 63,580
Investments 2,274,649 -
Mineral property interests 110,910,000 98,630,000
149,918,520 116,689,495
Liabilities and Shareholders`
Equity
Current liabilities
Accounts payable and accrued 1,330,823 644,245
liabilities
Due to related parties - 55,960
1,330,823 700,205
Future income taxes 18,837,000 19,364,000
Site reclamation obligations 405,000 -
19,242,000 19,364,000
Shareholders` equity
Share capital 201,457,592 161,228,635
Warrants 1,252,000 -
Contributed surplus 7,863,472 5,007,211
(81,227,367) (69,610,556)
Deficit
129,345,697 96,625,290
149,918,520 116,689,495
CONSOLIDATED STATEMENTS OF OPERATIONS
(EXPRESSED IN CANADIAN DOLLARS)
Years ended December 31
2006 2005
$ $
Expenses (income)
Conference and travel 1,076,087 336,402
Exploration (see schedule of 8,007,215 3,884,972
exploration expenses)
Foreign exchange gain (1,855,404) (3,114,429)
Interest and other income (1,278,543) (479,911)
Legal, accounting, and audit 541,391 502,872
Office and administration 3,639,079 1,222,037
Shareholder communications 337,111 283,838
Stock-based compensation - 1,087,933 18,783
exploration
Stock-based compensation - office 2,522,177 457,373
and administration
Trust and filing 234,483 85,684
Loss before the undernoted and 14,311,529 3,197,621
income taxes
Loss on disposal of fixed assets 916 -
(Gain) loss on sale of investments (112,005) 193,150
Mark-to-market adjustments on (212,000) 166,000
investments - (gain) loss
Loss before income taxes 13,988,440 3,556,771
Future income tax recovery (2,371,629) (1,993,000)
Loss for the year 11,616,811 1,563,771
Basic and diluted loss per share 0.11 0.02
Weighted average number of common 104,514,077 91,908,700
shares outstanding
CONSOLIDATED STATEMENTS OF DEFICIT
(EXPRESSED IN CANADIAN DOLLARS)
Years ended December 31
2006 2005
$ $
Deficit, beginning of year 69,610,556 68,046,785
Loss for the year 11,616,811 1,563,771
Deficit, end of the year 81,227,367 69,610,556
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN CANADIAN DOLLARS)
Years ended December 31
2006 2005
Operating activities
Loss for the period (11,616,811) (1,563,771)
Items not involving cash
Amortization 119,597 1,242
Future income tax recovery (2,382,000) (1,993,000)
Loss on disposal of fixed assets 916 -
(Gain) loss on sale of investments (112,005) 193,150
Non-cash stock-based compensation 3,610,110 476,156
expense
Provision for site reclamation cost 405,000 -
Unrealized foreign exchange (1,708,226) (3,239,000)
Warrants received for property - (345,000)
option agreement
Mark-to-market adjustment on (212,000) 166,000
investments
Changes in non-cash operating
working capital
Amounts receivable (217,587) 32,810
Inventories (53,437) -
Prepaid expenses (454,827) 41,011
Accounts payable and accrued 686,578 (107,921)
liabilities
Cash used in operating activities (11,934,692) (6,338,323)
Investing activities
Mineral property acquisition costs (23,774) -
Proceeds on sale of investments 547,005 77,850
Purchase of equipment (1,586,934) (7,322)
Purchase of shares on exercise of (44,000) -
Lumina warrants
Purchase of shares in Kryso (2,274,649) -
Resources Plc
Reclamation deposits (40,122) 1,088
Cash (used in) generated from (3,422,474) 71,616
investing activities
Financing activities
Common shares issued for cash, net 32,034,108 6,527,182
of cash issue costs
Advances (to) from related parties (229,415) 56,886
Cash from financing activities 31,804,693 6,584,068
Increase in cash and equivalents 16,447,527 317,361
Cash and equivalents, beginning of 17,516,909 17,199,548
year
Cash and equivalents, end of year 33,964,436 17,516,909
Supplementary information
Taxes paid 10,371 -
Interest paid - -
Interest received 1,256,197 479,911
Non-cash financing and investing
activities
Common shares issued for property 7,600,000 -
Warrants issued for property 1,093,000 -
Warrants issued as share issue cost 159,000 -
Warrants received for mineral - 345,000
property option agreement
Fair value of stock options 753,849 -
transferred to share capital on
options exercised from contributed
surplus
Increase in mineral property for 3,563,226 -
future income taxes
Consolidated Schedules of Exploration Expenses
(Expressed in Canadian Dollars)
Mineral Property Interests Years ended December 31
2006 2005
$ $
Burnstone
Assays and analysis 82,082 83,601
Amortization 119,103 85
Drilling 939,705 472,917
Engineering 246,864 1,216,433
Environmental, socio-economic 140,183 376,843
and land
Equipment rental 5,647 -
Geological 149,289 439,310
Graphics 2,821 8,552
Property fees and exploration 105,089 155,688
option payments
Site activities 267,581 221,127
Provision for site reclamation 405,000 -
cost
Transportation 4,874 16,532
Exploration expenses before the 2,468,238 2,991,088
following
Stock-based compensation 335,357 13,228
Exploration expenses incurred 2,803,595 3,004,316
during the year
Cumulative exploration expenditures 21,523,977 18,519,661
beginning of year
Cumulative exploration
expenditures, end of year 24,327,572 21,523,977
Burnstone Bulk Sampling
Establishment work 393,129 -
Equipment rental and services 185,314 -
Surface infrastructure 536,019 -
Portal construction 322,257 -
Underground access and 443,229 -
infrastructure
Operational costs 966,521 -
Property fees 60,742 -
Exploration expenses before the 2,907,211 -
following
Stock-based compensation 395,000 -
Exploration expenses incurred 3,302,211 -
during the year
Hollister
Assays and analysis 14,291 2,881
Amortization 494 -
Drilling 389,823 -
Engineering 118,469 66,935
Environmental, socio-economic 511,970 8,490
and land
Geological 401,164 109,781
Graphics 26,724 18,994
Property fees and exploration 155,814 153,856
option payments
Site activities 29,408 23,165
Transportation 17,606 5,883
Proceeds on option agreements - -
Exploration expenses before the 1,665,763 389,985
following
Stock-based compensation 226,326 1,787
Exploration expenses incurred 1,892,089 391,772
during the year
Cumulative exploration expenditures 23,300,423 22,908,651
beginning of year
Cumulative exploration 25,192,512 23,300,423
expenditures, end of year
Other
Assays and analysis 74,931 96,606
Amortization - 1,157
Drilling 326,054 298,871
Engineering 45,853 20,755
Environmental, socio-economic 1,268 2,064
and land
Equipment rental 20,291 18,276
Geological 320,260 312,802
Graphics 35,308 7,997
Property fees and exploration 1,419 4,254
option payments
Site activities 118,182 71,329
Transportation 22,437 14,788
Proceeds on option agreements - (345,000)
Exploration expenses before the 966,003 503,899
following
Stock-based compensation 131,250 3,768
Exploration expenses incurred 1,097,253 507,667
during the year
Cumulative exploration expenditures 334,221 (173,446)
beginning of year
Cumulative exploration 1,431,474 334,221
expenditures, end of year
Total exploration expenses before 8,007,215 3,884,972
the following
Stock-based compensation 1,087,933 18,783
Total exploration expenses incurred 9,095,148 3,903,755
during the year
Cumulative exploration expenditures 45,158,621 41,254,866
beginning of year
Cumulative exploration 54,253,769 45,158,621
expenditures, end of year
1. NATURE OF OPERATIONS
Great Basin is incorporated under the laws of the Province of British Columbia
and its principal business activity is the exploration and development of
mineral property interests. The Company`s principal mineral property interests
are the Hollister Gold Property ("Hollister") (formerly Ivanhoe Gold Property)
located in Nevada, United States of America ("USA"), and the Burnstone Gold
Property ("Burnstone") located in the Republic of South Africa ("South Africa").
The Company is in the process of exploring its mineral property interests and
has not yet determined whether its mineral property interests contain
economically recoverable mineral reserves. The underlying value and the
recoverability of the amounts shown for mineral property interests and equipment
are entirely dependent upon the existence of economically recoverable mineral
reserves, the ability of the Company to obtain the necessary financing to
complete the exploration and development of the mineral property interests, and
future profitable production or proceeds from the disposition of the mineral
property interests.
2. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
These financial statements have been prepared in accordance with Canadian
generally accepted accounting principles. These consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries. All material intercompany balances and transactions have been
eliminated.
3. SIGNIFICANT ACCOUNTING POLICIES
(a) Cash and equivalents
Cash and equivalents consist of cash and highly liquid investments, having
maturity dates of three months or less from the date of acquisition, that
are readily convertible to known amounts of cash.
(b) Investments
Investments capable of reasonably prompt liquidation are carried at the
lower of cost and quoted fair market value.
The Company`s investment in warrants is recorded at estimated fair value.
(c) Inventory
Materials and supplies inventory is valued at the lower of average cost and
replacement cost.
(d) Equipment
Equipment is stated at cost less accumulated amortization. Amortization is
provided on a straight-line basis over three to five years, which
represents the estimated useful lives of the related equipment.
Amortization on equipment used directly on exploration projects is included
in exploration expenses until such time the exploration expenditure is
being capitalized.
(e) Reclamation deposits
Reclamation deposits are recorded at cost.
(f) Mineral property interests
The Company capitalizes mineral property acquisition costs on a property-by-
property basis. Exploration expenditures and option payments incurred
prior to the determination of the feasibility of mining operations and the
decision to commence development are charged to operations as incurred.
Development expenditures incurred subsequent to a development decision, to
increase production, or to extend the life of existing production are
capitalized, except as noted below. Such acquisition costs and deferred
development expenditures are amortized over the estimated life of the
property, or written off to operations if the property is abandoned,
allowed to lapse, or if there is little prospect of further work being
carried out by the Company or its option or joint venture partners.
Mineral property acquisition costs include the cash consideration and the
fair market value of common shares issued for mineral property interests,
based on the trading price of the shares at the time the acquisition is
closed and shares issued pursuant to the terms of the relevant agreement.
Payments relating to a property acquired under an option or joint venture
agreement, where such payments are made at the sole discretion of the
Company, are recorded in the accounts upon payment.
Administrative expenditures are expensed as incurred.
The amount presented for mineral property interests represents costs
incurred to date and accumulated acquisition costs, less write-downs, and
does not necessarily reflect present or future values.
(g) Share capital
The Company records proceeds from share issuances net of issue costs.
Shares issued for consideration other than cash or in a business
combination are valued at the quoted market price on the date issued.
(h) Foreign currency translation
All of the Company`s foreign operations are considered integrated with
those of the Company`s domestic operations and use the Canadian dollar as
their functional currency.
Monetary assets and liabilities denominated in a foreign currency are
translated into Canadian dollars at exchange rates in effect at the balance
sheet date. Non-monetary assets and liabilities are translated at
historical exchange rates unless such items are carried at market, in which
case they are translated at the exchange rates in effect on the balance
sheet date. Revenues and expenses, except amortization, are translated at
the average exchange rates for the period. Amortization is translated at
the same exchange rate as the assets to which it relates. Gains or losses
on translation are recorded in the statement of operations.
(i) Loss per common share
Basic loss per common share is calculated by dividing the loss available to
common shareholders by the weighted average number of common shares
outstanding during the year. For all years presented, loss available to
common shareholders equals the reported loss.
Diluted loss per common share is calculated using the treasury stock
method. Under the treasury stock method, the weighted average number of
common shares outstanding used for the calculation of diluted loss per
share assumes that the proceeds to be received on the exercise of dilutive
share options and warrants are used to repurchase common shares at the
average market price during the year.
In the Company`s case, basic and diluted loss per share are the same as the
effect of the outstanding stock options and warrants would be anti-
dilutive.
(j) Fair value of financial instruments
The carrying amounts of cash and equivalents, amounts receivable and
accounts payable and accrued liabilities approximate their fair values due
to their short term nature. The fair value of amounts due to and from
related parties is not determinable due to the related party nature and the
lack of a market for such balances. Reclamation deposits which are cash
deposits held at financial institutions approximate their fair values due
to their nature.
The fair value of investments at December 31, 2006 is estimated to be
$2,339,460 (2005 - $179,000).
Fair value estimates are made at the date of issuances, and at the balance
sheet date, based on relevant market information and information about the
financial instruments.
(k) Use of estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Significant areas requiring the use
of management estimates relate to impairment of mineral property interests,
determination of reclamation obligations, assumptions used in determining
the fair value of non-cash stock-based compensation and warrants and
determination of valuation allowances for future income tax assets and
future income tax liabilities. Actual results could differ from these
estimates.
(l) Segment disclosure
The Company operates in a single segment, being the exploration and
development of mineral properties within the geographic areas disclosed.
(m) Stock-based compensation
The Company has a share option plan. The Company records all stock-based
payments using the fair value method.
Under the fair value method, stock-based payments are measured at the fair
value of the consideration received or the fair value of the equity
instruments issued or liabilities incurred, whichever is more reliably
measurable, and are charged to operations over the vesting period. The
offset is credited to contributed surplus.
Consideration received on the exercise of stock options is recorded as
share capital and the related contributed surplus is transferred to share
capital.
(n) Income taxes
The Company uses the asset and liability method of accounting for income
taxes. Under this method, future income tax assets and liabilities are
computed based on differences between the carrying amount of existing
assets and liabilities on the balance sheet and their corresponding tax
values, using the substantively enacted income tax rates expected to apply
to taxable income in the years in which those temporary differences are
expected to be recovered or settled. Future income tax assets also result
from unused loss carry forwards and other deductions. Future tax assets
are recognized to the extent that they are considered more likely than not
to be realized. The carrying value of future income tax assets is
adjusted, if necessary, by the use of a valuation allowance to reflect the
estimated realizable amount.
(o) Asset retirement obligations
The Company recognizes statutory, contractual or other legal obligations
related to the retirement of tangible long-lived assets when such
obligations are incurred, if a reasonable estimate of fair value can be
made. These obligations are measured initially at fair value and the
resulting costs capitalized to the carrying value of the related asset. To
the extent that the asset retirement obligation was created due to
exploration activities, the amount capitalized is reduced immediately by a
charge to exploration expenses for the same amount. In subsequent periods,
the liability is adjusted for any changes in the amount or timing and for
the discounting of the underlying future cash flows. The capitalized asset
retirement cost is amortized to operations over the life of the asset.
Asset retirement obligations had been assessed by management in 2005 but
the amounts were immaterial and consequently, no amounts were recorded in
the financial statements.
(p) Comparative figures
Certain of the prior years` comparative figures have been restated to
conform with the presentation adopted for the current year.
4. SEGMENT DISCLOSURE
The Company operates in a single reportable operating segment, the exploration
and development of mineral properties. Geographic information is as follows:
Assets December 31 December 31
2006 2005
$ $
Canada
Assets other than mineral 31,308,371 17,124,154
property interests
Mineral property interests 2 2
United States
Assets other than mineral 394,917 171,195
property interests
Mineral property interests 3,945,348 3,945,348
Republic of South Africa
Assets other than mineral 7,305,232 764,146
property interests
Mineral property interests 106,964,650 94,684,650
Total assets 149,918,520 116,689,495
5. SUBSEQUENT EVENTS
Subsequent to December 31, 2006,
(a) the Company filed a preliminary short-form prospectus with the securities
regulatory authorities in Canada and the US Securities and Exchange
Commission relating to a proposed best efforts public offering. The terms
of the proposed offering (including the number of common shares to be
issued, price per common share and gross proceeds) are to be determined
based on negotiations with the agents and entering into a final agency
agreement.
(b) the Company entered into an agreement to purchase Hecla`s 50% earn-in
rights and certain tangible assets in the HDB for a total consideration of
US$60 million. The purchase is to be financed through the public offering
noted above.
(c) the Company has entered into a framework agreement whereby Tranter will
purchase approximately 19.94 million shares ("the BEE Shares") in Great
Basin for ZAR 260 million (approximately US$37 million), which will
represent approximately 14.5% of the common shares in the Company (prior to
above share issuances), and thereby acquire a qualifying indirect interest
in the Burnstone Gold Project as required under South Africa`s broad-based
black economic empowerment act.
The unqualified audit opinion is available for inspection at the Company`s
registered offices as set out below.
For a copy of the full set of financial statements and notes, please refer to
the Great Basin Gold website.
Approved by the Board of Directors
Ferdi Dippenaar Ronald W Thiessen
Director Director
1020 - 800 West Pender Street 4th Floor, 138 West Street
Vancouver, BC Canada V6C 2V6 Sandown, Johannesburg
Tel 604 684?6365 South Africa
Fax 604 684?8092 Tel 011 884 1610
Toll Free 1 800 667?2114 Fax 011 884 1826
www.greatbasingold.com
3 April 2007
Johannesburg
Sponsor
Nedbank Capital
Date: 03/04/2007 11:42:51 Produced by the JSE SENS Department.
