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GBG
GBG
GBG - Great Basin Gold - Unaudited Interim Consolidated Financial Statements
For The Quarter And Nine Months Ended September 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 AND NINE
MONTHS ENDED SEPTEMBER 30, 2007
CONSOLIDATED BALANCE SHEETS
As at September 30, 2007 and December 31, 2006
(Expressed in Canadian Dollars)
September 30 December 31
2007 2006
$ $
Assets
Current assets
Cash and equivalents 69,319,039 33,964,436
Amounts receivable 4,142,217 426,349
Inventory 237,115 53,437
Due from related parties 944,358 173,455
Prepaid expenses 227,735 539,991
74,870,464 35,157,668
Property, plant and equipment 13,049,295 1,472,501
Reclamation deposits 1,687,460 103,702
Available-for-sale financial 3,059,139 2,274,649
instruments
8,000,000 -
Investment in associates
Mineral property interests 203,838,864 110,910,000
304,505,222 149,918,520
Liabilities and Shareholders`
Equity
Current liabilities
Accounts payable and accrued
liabilities 3,116,319 1,330,823
Due to related parties 41,804 -
3,158,123 1,330,823
Future income taxes 35,238,737 18,837,000
Site reclamation obligations 1,071,864 405,000
36,310,601 19,242,000
Shareholders` equity
Share capital 349,291,987 201,457,592
Warrants 15,885,437 1,252,000
Contributed surplus 12,821,398 7,863,472
Deficit (113,120,473) (81,227,367)
Accumulated other comprehensive
income 158,149 -
265,036,498 129,345,697
304,505,222 149,918,520
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the three months ended September 30, 2007 and September 30, 2006
(Expressed in Canadian Dollars)
Three months ended September
30
2007 2006
$ $
Income
(1,094,493) -
Other revenue - proceeds from bulk
sample
Expenses (income)
9,394,436 2,320,315
Exploration and development
Accretion of reclamation obligation 9,041 -
- 7,654
Amortization
596,371 168,882
Conference and travel
2,396,788 (479,853)
Foreign exchange loss(gain)
(970,756) (466,994)
Interest and other income
262,812 131,424
Legal, accounting, and audit
2,604,191 953,443
Office and administration
158,403 63,647
Shareholder communications
347,661 237,790
Stock-based compensation -
exploration
1,597,984 838,028
Stock-based compensation - office
and administration
Trust and filing 63,752 7,117
15,366,190 3,781,453
Loss before the undernoted and
income taxes
- (35,746)
Gain on sale of investments
(994,116) -
Gain on sale of assets
Loss before income taxes 14,372,074 3,745,707
Future income tax recovery (944,936) (1,717,927)
Loss for the period 13,427,138 2,027,780
Other comprehensive loss
447,157 -
Unrealized loss on available-for-
sale financial instruments
447,157 -
Other comprehensive loss
13,874,295 2,027,780
Total comprehensive loss
Basic and diluted loss per share 0.07 0.02
Weighted average number of common 180,963,160 111,308,314
shares outstanding
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the nine months ended September 30, 2007 and September 30, 2006
(Expressed in Canadian Dollars)
Nine months ended September
30
2007 2006
$ $
Income
(2,305,418) -
Other revenue - proceeds from bulk
sample
Expenses (income)
24,395,147 3,919,798
Exploration and development
28,524 -
Accretion of reclamation obligation
- 14,023
Amortization
Conference and travel 1,076,615 670,564
Foreign exchange loss(gain) 2,486,298 (2,605,088)
Interest and other income (2,122,865) (866,189)
Legal, accounting, and audit 708,262 365,152
Office and administration 6,508,045 2,435,557
Shareholder communications 304,768 261,958
764,527 867,244
Stock-based compensation -
exploration
3,809,122 2,031,905
Stock-based compensation - office
and administration
Trust and filing 277,499 104,676
35,930,524 7,199,600
Loss before the undernoted and
income taxes
- (111,405)
Gain on sale of investments
(994,116) -
Gain on sale of assets
- (212,600)
Mark-to-market adjustments on
investments
Loss before income taxes
34,936,408 6,875,595
Future income tax recovery
(3,043,302) (3,697,927)
Loss for the period 31,893,106 3,177,668
Other comprehensive income
(93,338) -
Unrealized gain on available-for-
sale financial instruments
(93,338) -
Other comprehensive income
31,799,768 3,177,668
Total comprehensive loss
Basic and diluted loss per share
0.21 0.03
Weighted average number of common
shares outstanding 153,786,378 101,665,636
CONSOLIDATED STATEMENTS OF SHAREHOLDERS`EQUITY AND DEFICIT
(Expressed in Canadian Dollars)
Nine months ended Year ended
September 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 802,626 - 753,849
options -
exercised
Private - 3,333,334 7,033,683
placement, net
of share issue -
costs
Shares issued 122,562,065 11,200,000 23,058,915
for cash, net of
share issue 57,500,000
costs
Share purchase 1,842,133 1,193,000 1,782,510
options 1,347,166
exercised
Shares issued - 4,000,000 7,600,000
for Burnstone
Gold Property,
July 2006 -
Shares issued 19,666,931 - -
for Hecla
Ventures Corp., 7,930,214
April 2007
Share purchase 2,960,640 - -
warrants
exercised 1,333,175
Balance at end 349,291,987 113,411,713 201,457,592
of the period 181,522,268
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- 4,573,649 3,610,110
based
compensation
Share purchase (802,626) (753,849)
options
exercised,
credited to
share capital
Fair value of 543,145 -
share purchase
warrants
exercised
Fair value of 17,418 -
share purchase 626,340 -
warrants expired
Fair value of
warrants
received
Balance at end 12,821,398 7,863,472
of the period
Deficit
Balance at (81,227,367) (69,610,556)
beginning of the
period
Net loss for the (31,893,106) (11,616,811)
period
Balance at end (113,120,473) (81,227,367)
of the period
Accumulated
other
comprehensive
income
Adjustment to 64,811 -
opening balance
- change in
accounting
policy
Unrealized gain 93,338 -
on available-for-
sale financial
instruments
Balance at end 158,149 -
of the period
TOTAL 265,036,498 129,345,697
SHAREHOLDERS`
EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended September 30, 2007 and September 30, 2006
(Expressed in Canadian Dollars)
Three months ended September
30
2007 2006
$ $
Operating activities
Loss for the period
(13,427,138) (2,027,780)
Items not involving cash
Amortization 342,997 28,756
Future income tax recovery (944,936) (1,717,927)
- (35,746)
Gain on sale of investment
(994,116) -
Gain on sale of assets
Non-cash stock-based compensation 1,945,645 1,075,818
expense
(1,019,240) (1,165,299)
Unrealized foreign exchange loss
9,041 -
Accretion reclamation obligation
Changes in non-cash operating
working capital
Amounts receivable (3,061,320) (96,972)
Inventory (100,383) -
(38,577) (710,732)
Prepaid expenses
Accounts payable and accrued (91,027) 97,715
liabilities
(53,557) -
Reclamation obligation
(6,060) -
Taxation paid
Cash used in operating activities (17,256,617) (4,552,167)
Investing activities
(43,096) (23,774)
Mineral property acquisition costs
- 161,746
Proceeds on sale of investments
1,000,905 -
Proceeds on sale of assets
(6,789) -
Cost on sale of assets
Purchase of equipment (8,169,042) (1,255,485)
-
Purchase of shares in Rusaf Gold (6,000,000)
Limited
- (7,000)
Purchase of shares on exercise of
Lumina warrants
Reclamation deposits (1,500,662) (40,076)
Cash used in investing activities (14,718,684) (1,164,589)
Financing activities
891,213 2,446,245
Common shares issued for cash, net
of issue costs
Advances (to) from related parties (649,220) 106,933
241,993 2,553,178
Cash generated from financing
activities
Decrease in cash and equivalents (31,733,308) (3,163,578)
101,052,347 41,799,332
Cash and equivalents, beginning of
period
Cash and equivalents, end of period 69,319,039 38,635,754
Supplementary information
Taxes paid (6,060) -
Interest paid - -
Interest received 970,756 466,994
Non-cash financing and investing
activities
Fair value of stock options 699,626 8,190
transferred to share capital on - 1,093,000
options exercised from contributed
surplus - 7,600,000
Warrants issued for cash
Common shares issued for property
settlement
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2007 and September 30, 2006
(Expressed in Canadian Dollars)
Nine months ended September 30
2007 2006
$ $
Operating activities
Loss for the period (31,893,106) (3,177,668)
Items not involving cash
Amortization 653,027 36,229
Future income tax recovery (3,043,302) (3,697,927)
- (111,405)
Gain on sale of investment
(994,116) -
Gain on sale of asset
- (212,600)
Mark-to-market adjustment on
investments
4,573,649 2,899,149
Non-cash stock-based compensation
expense
(2,175,524) (3,874,299)
Unrealized foreign exchange loss
28,524 -
Accretion reclamation obligation
Changes in non-cash operating
working capital
Amounts receivable (3,715,869) (258,896)
Inventory (183,678) -
312,256 (661,185)
Prepaid expenses
Accounts payable and accrued 968,981 418,913
liabilities
(55,440) -
Reclamation obligation
(94,698) -
Taxation paid
Cash used in operating activities (35,619,296) (8,639,689)
Investing activities
(159,860) (23,774)
Mineral property acquisition costs
- 547,005
Proceeds on sale of investments
1,000,905 -
Proceeds on sale of assets
(6,789) -
Cost on sale of assets
Purchase of equipment (11,325,994) (1,337,122)
(8,000,000) -
Purchase of shares in Rusaf Gold
Limited
(50,791,500) -
Purchase of Hecla Ventures Corp.
- (44,000)
Purchase of shares on exercise of
Lumina warrants
Reclamation deposits (1,583,758) (37,699)
Cash used in investing activities (70,866,996) (895,590)
Financing activities
142,558,838 30,848,508
Common shares issued for cash, net
of issue costs
Advances to related parties (729,099) (194,384)
141,829,739 30,654,124
Cash generated from financing
activities
Increase in cash and equivalents 35,343,447 21,118,845
11,156 -
Cash acquired through the purchase
of Hecla Ventures Corp.
33,964,436 17,516,909
Cash and equivalents, beginning of
period
Cash and equivalents, end of period 69,319,039 38,635,754
Supplementary information
(94,698) -
Taxes paid
Interest paid - -
Interest received 2,122,865
866,189
Non-cash financing and investing
activities
Fair value of stock options
transferred to share capital on 802,626 254,813
options exercised from contributed
surplus
Fair value of warrants issued with 15,194,000 159,000
short form prospectus offering
Warrants issued for property - 1,093,000
settlement
Common shares issued for property - 7,600,000
settlement
CONSOLIDATED SCHEDULE OF EXPLORATION AND DEVELOPMENT EXPENSES
(Expressed in Canadian Dollars)
Mineral Property Interests Nine months Year ended
ended December 31
September 30
2007 2006
$ $
Burnstone - Development
Metallurgical plant 94,187 -
Vertical shaft 250,067 -
Development expenses incurred during 344,254 -
the period
Cumulative development expenditures - -
beginning of year
344,254 -
Cumulative development expenditures,
end of period
Burnstone - Bulk Sampling
337,021 393,129
Establishment work
Equipment rental and services 816,668 185,314
Surface infrastructure 631,444 536,019
Portal construction 135,869 322,257
Underground access and 1,640,900 443,229
infrastructure
519,441 -
Optimisation
Operational costs 2,298,005 -
- 60,742
Property fees
Development expenses before the 6,379,348 2,907,211
following
Stock-based compensation 202,786 395,000
Development expenses incurred during 6,582,134 3,302,211
the period
Cumulative development expenditures 3,302,211 -
beginning of year
Cumulative development expenditures, 3,302,211
end of period 9,884,345
Burnstone - Exploration
Assays and analysis 101,746 82,082
Amortization 392,774 119,103
Drilling 1,776,174 939,705
Engineering 27,371 246,864
Environmental, socio-economic and (8,537) 140,183
land
Equipment rental 6,434 5,647
Geological 148,957 149,289
Graphics 13,782 2,821
Property fees and exploration option 46,164 105,089
payments
Site activities (14,313) 267,581
Provision for site reclamation cost - 405,000
Transportation 2,616 4,874
Exploration expenses before the 2,493,168 2,468,238
following
Stock-based compensation 79,253 335,357
Exploration expenses incurred during 2,572,421 2,803,595
the period
Cumulative exploration expenditures 24,327,572 21,523,977
beginning of year
Cumulative exploration expenditures, 26,899,993 24,327,572
end of period
Hollister - Development
Equipment rental and services 2,076,824 -
Surface infrastructure 2,024,004 -
Underground access and 4,005,542 -
infrastructure
Operational costs 2,152,349 -
Exploration expenses before the 10,258,719 -
following
Stock-based compensation 326,103 -
Exploration expenses incurred during 10,584,822 -
the period
Cumulative exploration expenditures - -
beginning of year
Cumulative exploration expenditures, 10,584,822 -
end of period
Hollister - Exploration
Assays and analysis 130,473 14,291
Amortization 260,253 494
Drilling 2,173,503 389,823
Engineering 170,235 118,469
Environmental, socio-economic and 882,779 511,970
land
Geological 283,495 401,164
Graphics 32,029 26,724
Property fees and exploration option 92,502 155,814
payments
Site activities 75,628 29,408
Transportation 60,275 17,606
Exploration expenses before the 4,161,172 1,665,763
following
Stock-based compensation 132,274 226,326
Exploration expenses incurred during 4,293,446 1,892,089
the period
Cumulative exploration expenditures 25,192,512 23,300,423
beginning of year
Cumulative exploration expenditures, 29,485,958 25,192,512
end of period
Other - Exploration
Assays and analysis 70,137 74,931
Drilling 200,767 326,054
Engineering 30,913 45,853
Environmental, socio-economic and 16,086 1,268
land
Equipment rental 51,793 20,291
Geological 164,605 320,260
Graphics 20,610 35,308
Property fees and exploration option 52,188 1,419
payments
Site activities 94,344 118,182
Transportation 57,043 22,437
Exploration expenses before the 758,486 966,003
following
Stock-based compensation 24,111 131,250
Exploration expenses incurred during 782,597 1,097,253
the period
Cumulative exploration expenditures 1,431,474 334,221
beginning of year
Cumulative exploration expenditures,
end of period 2,214,071 1,431,474
Total exploration expenses before
the following 24,395,147 8,007,215
Stock-based compensation
764,527 1,087,933
Total exploration expenses incurred
during the period 25,159,674 9,095,148
Cumulative exploration expenditures
beginning of year 54,253,769 45,158,621
Cumulative exploration expenditures,
end of period 79,413,443 54,253,769
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 nine month period ended September 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 investments in Kryso Plc. shares and warrants 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 loss for the period.
(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.
The following accounting policy was adopted during the nine
months ended September 30, 2007:
(i) Investment in associates
Associates are those entities in which the group has a material long
term interest and in respect of which the group exercises significant
influence over operational and financial policies, normally owning
between 20% and 50% of the voting equity, but which it does not
control.
Investments in associates are accounted for by using the equity method
of accounting and are initially recognized at cost. The company`s
share of its associates` post-acquisition profits or losses is
recognized in the income statement, and its share of post-acquisition
movements in reserves is recognized in reserves. Cumulative post-
acquisition movements are adjusted against the carrying amount of the
investment. When the company`s share of losses in an associate equals
or exceeds its interest in the associate, including any other
unsecured receivables, the company does not recognize further losses,
unless it has incurred obligations or made payments on behalf of the
associate.
14. SUBSEQUENT EVENTS
Subsequent to September 30, 2007,
the Company announced on October 1, 2007 that, Tranter Burnstone
(Proprietary) Limited ("Tranter Burnstone"), a subsidiary of Tranter Gold
(Proprietary) Limited (Tranter Gold), subscribed for 812 new ordinary
shares in Southgold Exploration (Proprietary) Limited ("Southgold"), a
wholly-owned subsidiary of Great Basin Gold, for a purchase consideration
of R260 million ($38 million) in cash,which, following the issue of
allotment of the new Southgold shares, constituted 26% of the entire issued
share capital of Southgold. Following the implementation of the Southgold
subscription, Great Basin Gold purchased the new Southgold shares from
Tranter Burnstone in exchange for the issue by Great Basin Gold of
19,938,650 new ordinary shares in Great Basin Gold to Tranter Burnstone.
on October 9, 2007 the Company acquired an additional 1,908,429 shares in
terms of a public placement undertaken by Kryso Resources Plc. This ensured
that the company maintained its 15% shareholding in the issued share
capital of Kryso. The shares were issued at 11.5 pence per share and the
total consideration of GBP219,469 ($448,266) was settled in cash.
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 November 2007
Johannesburg
Sponsor
Nedbank Capital
Date: 15/11/2007 09:00:01 Produced by the JSE SENS Department.
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