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GBG
GBG
GBG - Great Basin - Unaudited Interim Consolidated Financial Statements for the
quarter ended June 30, 2007
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")
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED
JUNE 30, 2007
CONSOLIDATED BALANCE SHEETS
As at June 30, 2007 and December 31, 2006
(Expressed in Canadian Dollars)
June 30 December 31
2007 2006
$ $
Assets
Current assets
Cash and equivalents 101,052,347 33,964,436
Amounts receivable 1,080,898 426,349
Inventory 136,732 53,437
Due from related parties 275,881 173,455
Prepaid expenses 189,158 539,991
102,735,016 35,157,668
Property, plant and equipment 5,223,249 1,472,501
Reclamation deposits 186,798 103,702
Available-for-sale financial
instruments 4,879,955 2,274,649
Mineral property interests 203,795,769 110,910,000
316,820,787 149,918,520
Liabilities and Shareholders`
Equity
Current liabilities
Accounts payable and accrued 3,025,292 1,330,823
liabilities
Due to related parties 22,547 -
3,047,839 1,330,823
Future income taxes 37,199,932 18,837,000
Site reclamation obligations 1,125,421 405,000
38,325,353 19,242,000
Shareholders` equity
Share capital 347,941,798 201,457,592
Warrants 15,885,437 1,252,000
Contributed surplus 10,708,389 7,863,472
Deficit (99,693,335) (81,227,367)
Accumulated other comprehensive
income 605,306 -
275,447,595 129,345,697
316,820,787 149,918,520
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the three months ended June 30, 2007 and June 30, 2006
(Expressed in Canadian Dollars)
Three months ended June 30
2007 2006
$ $
Expenses (income)
Other revenue (1,210,925) -
Exploration and development 9,891,160 959,975
Accretion of reclamation obligation 9,533 -
Amortization - 5,650
Conference and travel 264,043 301,933
Foreign exchange loss(gain) 622,707 (2,705,688)
Interest and other income (800,169) (253,855)
Legal, accounting, and audit 296,756 127,525
Office and administration 2,652,792 912,510
Shareholder communications 85,058 109,428
Stock-based compensation - 202,384 493,064
exploration
Stock-based compensation - office
and administration 1,671,852 865,622
Trust and filing 121,234 11,202
Loss before the undernoted and
income taxes 13,806,425 827,366
Profit on sale of investments - (75,659)
Mark-to-market adjustments on - (10,600)
investments
Loss before income taxes 13,806,425 741,107
Future income tax recovery (850,163) (1,980,000)
Loss (income) for the period 12,956,262 (1,238,893)
Other comprehensive income
Unrealized gain on available-for- (247,103) -
sale financial instruments
Other comprehensive income (247,103) -
tal comprehensive loss (income) 12,709,159 (1,238,893)
Basic and diluted loss (income) per 0.08 (0.01)
share
Weighted average number of common 166,043,585 99,627,242
shares outstanding
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the six months ended June 30, 2007 and June 30, 2006
(Expressed in Canadian Dollars)
Six months ended June 30
2007 2006
$ $
Expenses (income)
Other revenue (1,210,925) -
Exploration and development 15,000,711 1,599,483
Accretion of reclamation obligation 19,483 -
Amortization - 6,369
Conference and travel 480,244 501,682
Foreign exchange loss(gain) 89,510 (2,125,235)
Interest and other income (1,152,109) (399,195)
Legal, accounting, and audit 445,450 233,728
Office and administration 3,903,854 1,482,114
Shareholder communications 146,365 198,311
Stock-based compensation - 416,866 629,454
exploration
Stock-based compensation - office 2,211,138 1,193,877
and administration
Trust and filing 213,747 97,559
Loss before the undernoted and 20,564,334 3,418,147
income taxes
Profit on sale of investments - (75,659)
Mark-to-market adjustments on - (212,600)
investments
Loss before income taxes 20,564,334 3,129,888
Future income tax recovery (2,098,366) (1,980,000)
Loss (income) for the period 18,465,968 1,149,888
Other comprehensive income
Unrealized gain on available-for- (540,495) -
sale financial instruments
Other comprehensive income (540,495) -
Total comprehensive loss 17,925,473 1,149,888
Basic and diluted loss per share 0.13 0.01
Weighted average number of common
shares outstanding 139,972,765 96,764,385
CONSOLIDATED STATEMENTS OF SHAREHOLDERS`EQUITY AND DEFICIT
(Expressed in Canadian Dollars)
Six months ended Year ended
June 30, 2007 December 31, 2006
$ $
Common shares Shares Shares
Balance at 201,457,592 93,685,379 161,228,635
beginning of
period 113,411,713
Fair value of 343,650 - 753,849
options -
exercised
Private - 3,333,334 7,033,683
placement, net
of share issue -
costs
Shares issued 122,714,605 11,200,000 23,058,915
for cash, net of
share issue
costs 57,500,000
Share purchase 798,380 1,193,000 1,782,510
options
exercised 649,000
Shares issued - 4,000,000 7,600,000
for Burnstone
Gold Property,
July 2006 -
Shares issued 19,666,931 - -
for Hecla
Ventures Corp.,
April 2007 7,930,214
Share purchase 2,960,640 - -
warrants
exercised 1,333,175
Balance at end 347,941,798 113,411,713 201,457,592
of the period 180,824,102
Share purchase Warrants
warrants Warrants
Balance at 1,252,000 - -
beginning of the
period 2,672,000
Warrants issued 15,194,000 672,000 159,000
pursuant to
share issuance 28,750,000
Warrants issued - 2,000,000 1,093,000
for Burnstone
Gold Property -
Exercised (1,333,175) (543,145) - -
Expired (73,615) (17,418) - -
Balance at end 15,885,437 2,672,000 1,252,000
of period 30,015,210
Contributed
surplus
Balance at 7,863,472 5,007,211
beginning of the
period
Non-cash stock- 2,628,004 3,610,110
based
compensation
Share purchase (343,650) (753,849)
options
exercised,
credited to
share capital
Fair value of 543,145 -
share purchase
warrants
exercised
Fair value of 17,418 -
share purchase
warrants expired
Balance at end 10,708,389 7,863,472
of the period
Deficit
Balance at (81,227,367) (69,610,556)
beginning of the
period
Net loss for the (18,465,968) (11,616,811)
period
Balance at end (99,693,335) (81,227,367)
of the period
Accumulated
other
comprehensive
income
Adjustment to 64,811 -
opening balance
- change in
accounting
policy
Unrealized gain 540,495 -
on available-for-
sale financial
instruments
Balance at end 605,306 -
of the period
TOTAL 275,447,595 129,345,697
SHAREHOLDERS`
EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended June 30, 2007 and June 30, 2006
(Expressed in Canadian Dollars)
Three months ended June 30
2007 2006
$ $
Operating activities
(Loss) income for the period (12,956,262) 1,238,893
Items not involving cash
Amortization 224,276 6,202
Future income tax recovery (850,163) (1,980,000)
Profit on sale of investment - (75,659)
Mark-to-market adjustment on - (10,600)
investments
Non-cash stock-based compensation 1,874,236 1,358,686
expense
Unrealized foreign exchange loss (354,978) (3,309,000)
Accretion reclamation obligation 9,533 -
Changes in non-cash operating
working capital
Amounts receivable (788,736) (237,971)
Inventory (32,510) -
Prepaid expenses 670,985 38,346
Accounts payable and accrued (1,087,992) 449,109
liabilities
Reclamation obligation (54,634) -
Taxation paid (88,638) -
Cash used in operating activities (13,434,883) (2,521,994)
Investing activities
Mineral property acquisition costs (116,764) -
Proceeds on sale of investments - 348,259
Purchase of equipment (3,121,094) (54,235)
Purchase of shares in Rusaf Gold (2,000,000) -
Limited
Purchase of Hecla Ventures Corp. (50,791,500) -
Reclamation deposits (3,975) 2,631
Cash (used in) generated from (56,033,333) 296,655
investing activities
Financing activities
Common shares issued for cash, net 141,261,125 23,316,344
of issue costs
Subscriptions received in terms of - 4,556,840
private placement net of issue cost
Advances from (to) related parties 80,587 (102,350)
Cash generated from financing 141,341,712 27,770,834
activities
Increase in cash and equivalents 71,873,496 25,545,495
Cash acquired through the purchase 11,156 -
of Hecla Ventures Corp.
Cash and equivalents, beginning of 29,167,695 16,253,837
period
Cash and equivalents, end of period 101,052,347 41,799,332
Supplementary information
Taxes paid (88,638) -
Interest paid - -
Interest received 800,169 253,855
Non-cash financing and investing
activities
Fair value of stock options 240,650 8,233
transferred to share capital on
options exercised from contributed
surplus
Fair value of warrants issued with 15,194,000 159,000
short form prospectus offering
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2007 and June 30, 2006
(Expressed in Canadian Dollars)
Six months ended June 30
2007 2006
$ $
Operating activities
Loss for the period (18,465,968) (1,149,888)
Items not involving cash
Amortization 310,030 7,473
Future income tax recovery (2,098,366) (1,980,000)
Profit on sale of investment - (75,659)
Mark-to-market adjustment on - (212,600)
investments
Non-cash stock-based compensation 2,628,004 1,823,331
expense
Unrealized foreign exchange loss (1,156,284) (2,709,000)
Accretion reclamation obligation 19,483 -
Changes in non-cash operating
working capital
Amounts receivable (654,549) (161,924)
Inventory (83,295) -
Prepaid expenses 350,833 49,547
Accounts payable and accrued 877,954 321,198
liabilities
Reclamation obligation (1,883) -
Taxation paid (88,638) -
Cash used in operating activities (18,362,679) (4,087,522)
Investing activities
Mineral property acquisition costs (116,764) -
Proceeds on sale of investments - 348,259
Purchase of equipment (3,156,952) (81,637)
Purchase of shares in Rusaf Gold (2,000,000) -
Limited
Purchase of Hecla Ventures Corp. (50,791,500) -
Reclamation deposits (83,096) 2,377
Cash (used in) generated from (56,148,312) 268,999
investing activities
Financing activities
Common shares issued for cash, net 141,667,625 23,845,423
of issue costs
Subscriptions received in terms of - 4,556,840
private placement net of issue cost
Advances to related parties (79,879) (301,317)
Cash generated from financing 141,587,746 28,100,946
activities
Increase in cash and equivalents 67,076,755 24,282,423
Cash acquired through the purchase 11,156 -
of Hecla Ventures Corp.
Cash and equivalents, beginning of 33,964,436 17,516,909
period
Cash and equivalents, end of period 101,052,347 41,799,332
Supplementary information
Taxes paid (88,638) -
Interest paid - -
Interest received 1,152,109 399,195
Non-cash financing and investing
activities
Fair value of stock options 343,650 246,623
transferred to share capital on
options exercised from contributed
surplus
Fair value of warrants issued with 15,194,000 159,000
short form prospectus offering
CONSOLIDATED SCHEDULE OF EXPLORATION EXPENSES
(Expressed in Canadian Dollars)
Mineral Property Interests Six months Year ended
ended June 30 December 31
2007 2006
$ $
Burnstone - Bulk Sampling
Establishment work 238,384 393,129
Equipment rental and services 528,033 185,314
Surface infrastructure 369,688 536,019
Portal construction 99,265 322,257
Underground access and 970,974 443,229
infrastructure
Optimization 433,157 -
Operational costs 1,424,710 966,521
Property fees - 60,742
Exploration expenses before the 4,064,211 2,907,211
following
Stock-based compensation 112,943 395,000
Exploration expenses incurred during 4,177,154 3,302,211
the period
Cumulative exploration expenditures 3,302,211 -
beginning of year
Cumulative exploration expenditures, 7,479,365 3,302,211
end of period
Burnstone - Exploration
Assays and analysis 85,083 82,082
Amortization 176,127 119,103
Drilling 1,269,578 939,705
Engineering 23,985 246,864
Environmental, socio-economic and (6,334) 140,183
land
Equipment rental 3,540 5,647
Geological 88,808 149,289
Graphics 14,121 2,821
Property fees and exploration option 9,923 105,089
payments
Site activities (70,439) 267,581
Provision for site reclamation cost - 405,000
Transportation 1,510 4,874
Exploration expenses before the 1,595,902 2,468,238
following
Stock-based compensation 44,350 335,357
Exploration expenses incurred during 1,640,252 2,803,595
the period
Cumulative exploration expenditures 24,327,572 21,523,977
beginning of year
Cumulative exploration expenditures,
end of period 25,967,824 24,327,572
Hollister - Development
Equipment rental and services 847,457 -
Surface infrastructure 1,327,566 -
Underground access and 2,896,842 -
infrastructure
Operational costs 407,177 -
Exploration expenses before the 5,479,042 -
following
Stock-based compensation 152,261 -
Exploration expenses incurred during 5,631,303 -
the period
Cumulative exploration expenditures - -
beginning of year
Cumulative exploration expenditures, 5,631,303 -
end of period
Hollister - Exploration
Assays and analysis 40,738 14,291
Amortization 133,903 494
Drilling 1,237,752 389,823
Engineering 95,930 118,469
Environmental, socio-economic and 169,209 511,970
land
Geological 198,626 401,164
Graphics 29,990 26,724
Property fees and exploration option (34,643) 155,814
payments
Site activities 1,726,055 29,408
Transportation 35,245 17,606
Exploration expenses before the 3,632,805 1,665,763
following
Stock-based compensation 100,954 226,326
Exploration expenses incurred during 3,733,759 1,892,089
the period
Cumulative exploration expenditures 25,192,512 23,300,423
beginning of year
Cumulative exploration expenditures, 28,926,271 25,192,512
end of period
Other - Exploration
Assays and analysis 31,249 74,931
Drilling 6,665 326,054
Engineering 21,047 45,853
Environmental, socio-economic and 8,108 1,268
land
Equipment rental 3,960 20,291
Geological 44,525 320,260
Graphics 1,650 35,308
Property fees and exploration option 88,589 1,419
payments
Site activities 19,677 118,182
Transportation 3,281 22,437
Exploration expenses before the 228,751 966,003
following
Stock-based compensation 6,358 131,250
Exploration expenses incurred during 235,109 1,097,253
the period
Cumulative exploration expenditures 1,431,474 334,221
beginning of year
Cumulative exploration expenditures, 1,666,583 1,431,474
end of period
Total exploration expenses before 15,000,711 8,007,215
the following
Stock-based compensation 416,866 1,087,933
Total exploration expenses incurred 15,417,577 9,095,148
during the period
Cumulative exploration expenditures 54,253,769 45,158,621
beginning of year
Cumulative exploration expenditures, 69,671,346 54,253,769
end of period
1. NATURE OF OPERATIONS
These interim consolidated financial statements are prepared in accordance with
Canadian generally accepted accounting principles. They do not include all the
disclosures as required for annual financial statements under generally accepted
accounting principles. These interim consolidated financial statements should be
read in conjunction with the Company`s annual consolidated financial statements
which are available through the Internet on SEDAR at www.sedar.com.
Operating results for the six month period ended June 30, 2007 are not
necessarily indicative of the results that may be expected for the full year
ending December 31, 2007.
2. SIGNIFICANT ACCOUNTING POLICIES
These interim consolidated financial statements follow the same accounting
policies and methods of application as the Company`s most recent audited annual
financial statements, except for the changes described in note 3.
3. CHANGES IN ACCOUNTING POLICIES
Effective January 1, 2007, the Company adopted the following new accounting
standards issued by the Canadian Institute of Chartered Accountants ("CICA")
relating to financial instruments. These new standards have been adopted on a
prospective basis with no restatement to prior period financial statements.
(a) Financial Instruments - Recognition and Measurement (Section 3855)
This standard sets out criteria for the recognition and measurement of financial
instruments for fiscal years beginning on or after October 1, 2006. This
standard requires all financial instruments within its scope, including
derivatives, to be included on a Company`s balance sheet and measured either at
fair value or, in certain circumstances when fair value may not be considered
most relevant, at cost or amortized cost. Changes in fair value are to be
recognized in the statements of operations and comprehensive income (loss).
All financial assets and liabilities are recognized when the entity becomes a
party to the contract creating the item. As such, any of the Company`s
outstanding financial assets and liabilities at the effective date of adoption
are recognized and measured in accordance with the new requirements as if these
requirements had always been in effect. Any changes to the fair values of assets
and liabilities prior to January 1, 2007 are recognized by adjusting opening
deficit or opening accumulated other comprehensive income (loss).
All financial instruments are classified into one of the following five
categories: held for trading, held-to- maturity, loans and receivables,
available-for-sale financial assets, or other financial liabilities. Initial and
subsequent measurement and recognition of changes in the value of financial
instruments depends on their initial classification:
Held-to-maturity investments, loans and receivables, and other financial
liabilities are initially measured at fair value and subsequently measured at
amortized cost. Amortization of premiums or discounts and losses due to
impairment are included in current period net earnings.
Available-for-sale financial assets are measured at fair value. Revaluation
gains and losses are included in other comprehensive income until the asset is
removed from the balance sheet.
Held for trading financial instruments are measured at fair value. All gains and
losses are included in net earnings in the period in which they arise.
All derivative financial instruments are classified as held for trading
financial instruments and are measured at fair value, even when they are part of
a hedging relationship. All gains and losses are included in net earnings in the
period in which they arise.
In accordance with this new standard, the Company has classified its financial
instruments as follows:
The Company`s investment in Kryso Plc. shares are classified as available-for-
sale financial instruments. Such instruments are measured at fair market value
in the consolidated financial statements with unrealized gains or losses
recorded in comprehensive income (loss). At the time the investment is disposed
of, gains or losses are included in net earnings (loss).
(b) Hedging (Section 3865)
This new standard specifies the circumstances under which hedge accounting is
permissible and how hedge accounting may be performed. The Company currently
does not have any hedges as it has a policy of non-hedging.
(c) Comprehensive Income (Section 1530)
Comprehensive income is the change in shareholders` equity during a period from
transactions and other events from non-owner sources. This standard requires
certain gains and losses that would otherwise be recorded as part of net
earnings to be presented in other "comprehensive income" until it is considered
appropriate to recognize into net earnings. This standard requires the
presentation of comprehensive income, and its components in a separate financial
statement that is displayed with the same prominence as the other financial
statements.
Accordingly, the Company now reports a consolidated statement of comprehensive
income (loss) and includes the account "accumulated other comprehensive income"
in the shareholders` equity section of the consolidated balance sheet.
11. SUBSEQUENT EVENTS
Subsequent to June 30, 2007,
- the Company concluded the second tranche of the Rusaf agreement and
acquired an additional 10,000,000 shares at $0.60 per share for a total
consideration of $6,000,000 on July 20, 2007. A further 6,666,667 shares
will be acquired through the conclusion of the third tranche of the
transaction. The investment will equate to approximately 40% of Rusaf`s
total share capital.
- the Company acquired and gained the right to exercise the 5,000,000
warrants received from Kryso Resources Plc. The warrants are exercisable at
a price of 15 pence for a common share of Kryso over two years. The
exercise of the warrants required the approval of Kryso`s shareholders at
their shareholders meeting, which was held and obtained on July 6, 2007.
These warrants have been valued at an estimated fair value of $645,140
(using expected volatility of 76%, risk free interest rate of 4%, dividends
of nil and remaining life of approximately 2 years).
- the Company announced on July 18, 2007 that a Letter of Intent was
concluded on June 8, 2007, whereby the Company can earn an 80% interest in
all hard rock mineral rights on the Ganes Creek Property in Alaska by
making a total of US$3 million in exploration expenditures over a period of
3 years. The Ganes Creek Property is held by Clark/Wiltz Mining, based in
Talkeetna, Alaska, USA.
- the Company concluded on July 11, 2007 a Memorandum of Understanding to
enter into a joint venture with G S Midas E Refinaria Limitade (GSR) in
Mozambique. The purpose of the Joint Venture is to establish a gold
exploration and mining business in Mozambique, whereby the Company will
have the exclusive right to explore all GSR`s properties. The Company will
have an 80% interest in the Joint Venture, and has committed to exploration
expenditures of approximately US$2 million over a three year period on the
Tsetsera Property, which is located 80km south of Manica in Mozambique, and
other properties over which GSR holds mineral rights.
- the Company granted 720,000 options on July 5, 2007 with an exercise price
of $2.77 per common share and an expiry date of July 5, 2010.
The full set of financial statements and Management Discussion and Analysis are
available on Great Basin`s website: www.greatbasingold.com
Approved by the Board of Directors
Ferdi Dippenaar Ronald W Thiessen
Director Director
4th Floor, 138 West Street 1020 - 800 West Pender Street
Sandown, Johannesburg Vancouver, BC Canada V6C 2V6
South Africa Tel 604 684?6365
Tel 011 884 1610 Fax 604 684?8092
Fax 011 884 1826 Toll Free 1 800 667?2114
www.greatbasingold.com
15 August 2007
Johannesburg
Sponsor
Nedbank Capital
Date: 15/08/2007 09:05:01 Produced by the JSE SENS Department.
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