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GBG
GBG
GBG - Great Basin - Unaudited Interim Consolidated Financial Statements For
The Quarter And Six Months Ended June 30, 2008
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 SIX
MONTHS ENDED JUNE 30, 2008
CONSOLIDATED BALANCE SHEETS
(Expressed in Canadian Dollars)
June 30 December 31
2008 2007
$ $
Assets
Current assets
Cash and cash equivalents 22,560,142 78,362,954
Amounts receivable 7,529,523 3,737,903
Inventory 1,201,264 199,185
Due from related parties 2,455 408,638
Held-for-trading financial
instruments 460,265 833,000
Prepaid expenses 791,150 811,208
32,544,799 84,352,888
Property, plant and equipment 29,584,631 14,295,727
Reclamation deposits 2,204,073 1,720,456
Available-for-sale financial
instruments 2,390,469 3,326,084
Investments in associate - 7,203,973
Mineral property interests 250,382,505 218,413,930
TOTAL ASSETS 317,106,477 329,313,058
Liabilities and Shareholders`
Equity
Current liabilities
Accounts payable and accrued
liabilities 11,086,953 6,099,246
Due to related parties 27,707 22,098
11,114,660 6,121,344
Future income taxes 33,555,717 33,983,164
Site reclamation obligations 1,429,963 1,416,964
34,985,680 35,400,128
Shareholders` equity
Share capital 417,824,636 389,451,022
Warrants 17,389,040 17,934,934
Contributed surplus 18,571,192 12,197,791
Deficit (182,445,988) (132,395,033)
Accumulated other comprehensive
(loss) income (332,743) 602,872
271,006,137 287,791,586
TOTAL LIABILITIES AND SHAREHOLDERS`
EQUITY 317,106,477 329,313,058
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the three months ended June 30, 2008 and June 30, 2007
(Expressed in Canadian Dollars)
Three months ended June 30
2008 2007
$ $
Revenue 7,796,115 -
(Expenses) income
Production cost (3,890,532) -
Exploration expenses (6,605,591) (4,352,600)
Pre-development expenses (25,878,952) (5,740,944)
Accretion of reclamation obligation (17,127) (9,533)
Conference and travel (434,931) (264,043)
Foreign exchange gain (loss) 441,499 (622,707)
Legal, accounting, and audit (345,759) (296,756)
Office and administration (6,576,194) (4,324,644)
Other income 68,296 1,211,182
Shareholder communications (140,618) (85,058)
Trust and filing (186,103) (121,234)
Loss before the undernoted and (35,769,897) (14,606,337)
income taxes
Interest received 623,617 799,912
Unrealized loss on held-for-trading (188,678) -
financial instruments
Loss before income taxes (35,334,958) (13,806,425)
Future income tax recovery 2,296,572 850,163
Loss for the period (33,038,386) (12,956,262)
Other comprehensive income
Unrealized (loss)gain on available- (525,775) 247,103
for-sale financial instruments
Other comprehensive (loss) income (525,775) 247,103
(33,564,161) (12,709,159)
Total comprehensive loss for the
period
Basic and diluted loss per share (0.16) (0.08)
Weighted average number of common
shares outstanding 205,929,921 166,043,585
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the six months ended June 30, 2008 and June 30, 2007
(Expressed in Canadian Dollars)
Six months ended June 30
2008 2007
$ $
Revenue 7,796,115 -
(Expenses) income
Production cost (3,890,532) -
Exploration expenses (9,743,143) (5,609,120)
Pre-development expenses (35,949,933) (9,808,457)
Accretion of reclamation obligation (34,466) (19,483)
Conference and travel (810,922) (480,244)
Foreign exchange gain (loss) (2,140,504) (89,510)
Legal, accounting, and audit (599,340) (445,450)
Office and administration (10,913,270) (6,114,992)
Other income 74,899 1,214,158
Shareholder communications (288,884) (146,365)
Trust and filing (416,427) (213,747)
Loss before the undernoted and (56,916,407) (21,713,210)
income taxes
Interest received 1,793,011 1,148,876
Loss from associate (351,446) -
Unrealized loss on held-for-trading (372,735) -
financial instruments
Loss before income taxes (55,847,577) (20,564,334)
Future income tax recovery 5,796,622 2,098,366
Loss for the period (50,050,955) (18,465,968)
Other comprehensive income
Unrealized (loss)gain on available- (935,615) 540,495
for-sale financial instruments
Other comprehensive (loss) income (935,615) 540,495
(50,986,570) (17,925,473)
Total comprehensive loss for the
period
Basic and diluted loss per share (0.24) (0.13)
Weighted average number of common
shares outstanding 207,773,615 139,972,765
CONSOLIDATED STATEMENTS OF SHAREHOLDERS`EQUITY AND DEFICIT
(Expressed in Canadian Dollars)
Six months ended Year ended
June 30, 2008 December 31, 2007
$ $
Common shares Shares Shares
Balance at 390,139,711 201,457,592
beginning of the
period 203,395,902 113,411,713
Fair value of 859,318 2,005,064
options - -
exercised
Shares issued
for cash, net of
share issue - - 57,500,000 121,427,869
costs
Share purchase 1,784,302 5,111,184
options 955,500 3,015,830
exercised
Shares issued - 19,666,931
for Hecla
Ventures Corp., - 7,930,214
April 2007
Shares issued to - 36,323,195
Tranter
Burnstone (Pty)
Ltd, October - 19,938,650
2007
Shares issued to 29,700 -
CW Properties
LLC, February
2008 10,000 -
Shares issued 22,787,802 -
for Rusaf Gold
Limited, April
2008 6,613,636 -
Share purchase 2,223,803 4,147,876
warrants
exercised 998,890 1,599,495
Balance at end 417,824,636 390,139,711
of the period 211,973,928 203,395,902
Share purchase Warrants
warrants Warrants
Balance at 17,934,934 1,252,000
beginning of the
period 31,433,202 2,672,000
Warrants issued - 16,210,226
pursuant to
share issuance - 28,750,000
Warrants issued - 1,178,815
pursuant Tranter
transaction - 1,684,312
Exercised (998,890) (545,894) (1,599,495) (688,689)
Expired - - (73,615) (17,418)
Balance at end
of the period 30,434,312 17,389,040 31,433,202 17,934,934
Contributed
surplus
Balance at 11,509,102 7,863,472
beginning of the
period
Non-cash stock- 6,157,932 5,633,276
based
compensation
Share purchase
options
exercised,
credited to
share capital (859,318) (2,005,064)
Fair value of - 17,418
share purchase
warrants expired
Options and 1,763,476 -
warrants on
acquisition of
Rusaf
Balance at end 18,571,192 11,509,102
of the period
Deficit
Balance at (132,395,033) (81,227,367)
beginning of the
period
Net loss for the (50,050,955) (51,167,666)
period
Balance at end (182,445,988) (132,395,033)
of the period
Accumulated
other
comprehensive
income
Balance at 602,872 64,811
beginning of the
period
Unrealized (935,615) 538,061
(loss) gain on
available-for-
sale financial
instruments
Balance at end (332,743) 602,872
of the period
TOTAL
SHAREHOLDERS`
EQUITY 271,006,137 287,791,586
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended June 30, 2008 and June 30, 2007
(Expressed in Canadian Dollars)
Three months ended June 30
2008 2007
$ $
Operating activities
Loss for the period (33,038,386) (12,956,262)
Items not involving cash
Depreciation 683,303 224,276
Future income tax recovery (2,296,572) (850,163)
Unrealized loss on held-for-trading 188,678 -
on financial instruments
Non-cash stock-based compensation
expense 4,777,925 1,874,236
Unrealized foreign exchange gain (25,083) (354,978)
Accretion reclamation obligation 17,127 9,533
Changes in non-cash operating
working capital
Amounts receivable (3,188,321) (788,736)
Prepaid expenses 214,251 670,985
Inventory 3,917,255 (32,510)
Accounts payable and accrued
liabilities 3,518,939 (1,176,630)
Reclamation obligation 26,409 (54,634)
Cash used in operating activities (25,204,475) (13,434,883)
Investing activities
Mineral property acquisition costs (189,036) (116,764)
Purchase of equipment (8,582,126) (3,121,094)
Purchase of shares in Rusaf Gold - (2,000,000)
Limited
Purchase of Hecla Ventures Corp. - (50,791,500)
Reclamation deposits (27,204) (3,975)
Cash used in investing activities (8,798,366) (56,033,333)
Financing activities
Common shares issued for cash, net
of issue costs 1,518,324 141,261,125
Advances from (to)related parties 21,387 80,587
Cash generated from financing
activities 1,539,711 141,341,712
(Decrease) increase in cash and
cash equivalents (32,463,130) 71,873,496
Cash acquired through the 4,494,976 -
acquisition of Rusaf Gold Limited
Cash acquired through the - 11,156
acquisition of Hecla Ventures Corp.
Cash and equivalents, beginning of
the period 50,528,296 29,167,695
Cash and equivalents, end of the
period 22,560,142 101,052,347
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2008 and June 30, 2007
(Expressed in Canadian Dollars)
Six months ended June 30
2008 2007
$ $
Operating activities
Loss for the period (50,050,955) (18,465,968)
Items not involving cash
Depreciation 1,137,560 310,030
Future income tax recovery (5,796,622) (2,098,366)
Unrealized loss on held-for-trading 372,735 -
on financial instruments
Loss from associate 351,446 -
Non-cash stock-based compensation
expense 6,157,932 2,628,004
Unrealized foreign exchange gain (680,617) (1,156,284)
Accretion reclamation obligation 34,466 19,483
Changes in non-cash operating
working capital
Amounts receivable (3,302,557) (654,549)
Prepaid expenses 348,460 350,833
Inventory (1,002,079) (83,295)
Accounts payable and accrued
liabilities 4,843,171 789,316
Reclamation obligation 12,999 (1,883)
Cash used in operating activities (47,574,061) (18,362,679)
Investing activities
Mineral property acquisition costs (230,096) (116,764)
Purchase of equipment (15,788,639) (3,156,952)
Purchase of shares in Rusaf Gold - (2,000,000)
Limited
Purchase of Hecla Ventures Corp. - (50,791,500)
Reclamation deposits (483,617) (83,096)
Cash used in investing activities (16,502,352) (56,148,312)
Financing activities
Common shares issued for cash, net
of issue costs 3,366,833 141,667,625
Advances from (to)related parties 411,792 (79,879)
Cash generated from financing 3,778,625 141,587,746
activities
(Decrease) increase in cash and
cash equivalents (60,297,788) 67,076,755
Cash acquired through the 4,494,976 -
acquisition of Rusaf Gold Limited
Cash acquired through the - 11,156
acquisition of Hecla Ventures Corp.
Cash and equivalents, beginning of
the period 78,362,954 33,964,436
Cash and equivalents, end of the
period 22,560,142 101,052,347
CONSOLIDATED SCHEDULE OF EXPLORATION EXPENSES
(Expressed in Canadian Dollars)
Mineral Property Interests Six months Year ended
ended June 30 December 31
2008 2007
$ $
Burnstone - Exploration
Assays and analysis 16,571 122,805
Depreciation 404,787 443,666
Drilling 1,219,842 2,427,840
Engineering 6,183 27,034
Environmental, socio-economic and 395 12,666
land
Equipment rental 617 (21,900)
Geological 79,308 279,522
Graphics 1,258 15,727
Property fees and exploration option (2,656) 22,907
payments
Site activities 115,265 (20,884)
Transportation - 3,788
Exploration expenses before the 1,841,570 3,313,171
following
Office and administration 42,823 92,612
Exploration expenses incurred during
the period 1,884,393 3,405,783
Cumulative exploration expenditures, 27,733,355 24,327,572
beginning of period
Cumulative exploration expenditures,
end of period 29,617,748 27,733,355
Hollister - Exploration
Assays and analysis 630,345 425,298
Depreciation 648,949 612,831
Drilling 3,481,857 2,880,079
Engineering 32,262 1,170,116
Environmental, socio-economic and 529,499 1,574,917
land
Equipment rental - 24,350
Freight - 47,292
Geological (6,612) 606,237
Graphics - 52,026
Property fees and exploration option - 168,334
payments
Site activities 19,788 725,672
Transportation - 68,656
Exploration expenses before the 5,336,088 8,355,808
following
Office and administration 124,083 233,565
Exploration expenses incurred during 5,460,171
the period 8,589,373
Cumulative exploration expenditures, 33,781,885 25,192,512
beginning of period
Cumulative exploration expenditures,
end of period 39,242,056 33,781,885
Rusaf Gold - Exploration
Assays and analysis 395,825 -
Depreciation 51,082 -
Drilling 183,100 -
Environmental, socio-economic and 103 -
land
Equipment rental 143,317 -
Freight 53,549 -
Geological 280,344 -
Graphics 327 -
Property fees and exploration option 63,973 -
payments
Site activities 501,564 -
Exploration expenses incurred during 1,673,184 -
the period
Cumulative exploration expenditures, - -
beginning of period
Cumulative exploration expenditures, 1,673,184 -
end of period
Other - Exploration
Assays and analysis 113,739 100,271
Depreciation 4,219 -
Drilling - 195,976
Engineering 62,727 20,109
Environmental, socio-economic and - 4,316
land
Equipment rental 102,773 46,383
Freight 29,504 14,450
Geological 46,971 273,369
Graphics 3,578 18,408
Property fees and exploration option 9,447 84,363
payments
Site activities 335,951 253,184
Transportation - 55,968
Exploration expenses before the 708,909 1,066,797
following
Office and administration 16,486 29,820
Exploration expenses incurred during 725,395 1,096,617
the period
Cumulative exploration expenditures, 2,528,091 1,431,474
beginning of period
Cumulative exploration expenditures,
end of period 3,253,486 2,528,091
Total exploration expenses before
the following 9,559,751 12,735,776
Office and administration 183,392 355,997
Total pre-development and
exploration expenses incurred during 9,743,143 13,091,773
the period
Cumulative pre-development and
exploration expenditures, beginning 64,043,331 50,951,558
of period
Cumulative pre-development and
exploration expenditures, end of 73,786,474 64,043,331
period
CONSOLIDATED SCHEDULE OF EXPLORATION EXPENSES
(Expressed in Canadian Dollars)
Mineral Property Interests Six months Year ended
ended June 30 December 31
2008 2007
$ $
Burnstone - Pre-development
Bulk Sampling
Establishment work 57,574 697,457
Equipment rental and services 801,571 1,047,259
Surface infrastructure - 836,042
Portal construction 2,422,917 308,660
Underground access and - 4,000,468
infrastructure
Other cost
Optimization - 523,543
Operational costs 3,088,234 3,348,964
Metallurgical plant 35,789 186,837
Vertical shaft 4,063,367 508,530
Energy project 48,028 -
Permanent infrastructure - surface 616,707 -
Permanent infrastructure - 2,116,418 -
underground
Pre-development expenses before the 13,250,605 11,457,760
following
Office and administration 308,124 320,274
Pre-development expenses incurred 13,558,729 11,778,034
during the period
Cumulative pre-development 15,080,245 3,302,211
expenditures, beginning of period
Cumulative pre-development
expenditures, end of period 28,638,974 15,080,245
Hollister - Pre-development
Equipment rental and services 744,220 1,937,187
Surface infrastructure 1,456,484 2,942,261
Underground access and 9,987,112 6,682,426
infrastructure
Operational costs 9,694,546 6,289,421
Pre-development expenses before the 21,882,362 17,851,295
following
Office and administration 508,842 498,990
Pre-development expenses incurred
during the period 22,391,204 18,350,285
Cumulative pre-development 18,350,285 -
expenditures, beginning of period
Cumulative pre-development expenses,
end of period 40,741,489 18,350,285
Total pre-development and
exploration expenses before the 35,132,967 29,309,055
following
Office and administration 816,966 819,264
Total pre-development and
exploration expenses incurred during 35,949,933 30,128,319
the period
Cumulative pre-development and
exploration expenditures, beginning 33,430,530 3,302,211
of period
Cumulative pre-development and
exploration expenditures, end of 69,380,463 33,430,530
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, 2008 are not
necessarily indicative of the results that may be expected for the full year
ending December 31, 2008.
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. Adoption of new accounting policies
Effective January 1, 2008, the Company adopted the following accounting
standards updates issued by the Canadian Institute of Chartered Accountants
("CICA"). These new standards have been adopted on a prospective basis with
no restatement to prior period financial statements.
(a) Capital disclosure (Section 1535)
This standard requires disclosure of an entity`s objectives, policies and
processes for managing capital, quantitative data about what the entity
regards as capital and whether the entity has complied with any capital
requirements and, if it has not complied, the consequences of such non-
compliance.
The Company`s objectives when managing capital are:
- To safeguard the Company`s ability to continue as a going concern, so
that it can provide returns for shareholders and benefits for other
stakeholders, and
- To provide an adequate return to shareholders by pricing products
commensurately with the level of risk.
The Company considers the items included in the consolidated statement of
shareholder`s equity as capital. The Company manages the capital structure
and makes adjustments to it in the light of changes in economic conditions
and the risk characteristics of the underlying assets. In order to maintain
or adjust the capital structure, the Company may issue new shares through
private placements, sell assets to reduce debt or return capital to
shareholders. The Company is not subject to externally imposed capital
requirements.
(b) Financial Instruments - Disclosure (Section 3862) and Presentation
(Section 3863)
These standards replace CICA 3861, Financial Instruments - Disclosure and
Presentation. They increase the disclosures currently required, which will
enable users to evaluate the significance of financial instruments for an
entity`s financial position and performance, including disclosures about fair
value. In addition, disclosure is required of qualitative and quantitative
information about exposure to risks arising from financial instruments,
including specified minimum disclosures about credit risk, liquidity risk and
market risk. The quantitative disclosures must provide information about the
extent to which the entity is exposed to risk, based on information provided
internally to the entity`s key management personnel.
Refer to note 3 of the financial statements filed on www.sedar.com or the
Company`s website for a detailed discussion of these risks.
(c) Inventories (Section 3031)
This standard requires that inventories be measured at the lower of cost and
net realizable value, and includes guidance on the determination of cost,
including allocation of overheads and other costs. The standard also requires
that similar inventories within a consolidated group be measured using the
same method. It also requires the reversal of previous write-downs to net
realizable value when there is a subsequent increase in the value of
inventories.
The adoption of the Section had no impact on the Company`s statement of
operations. Inventories are valued consistent with prior years at the lower
of cost or net realizable value throughout the consolidated group.
(d) Going Concern - Amendments to Section 1400
CICA 1400, General Standards of Financial Statements Presentation, was
amended to include requirements to assess and disclose an entity`s ability to
continue as a going concern. The new requirements are effective for interim
and annual financial statements relating to fiscal years beginning on or
after January 1, 2008.
At June 30, 2008, the Company had working capital of approximately $21.4
million. The Company has immediate access to R200 million of a total of a
R930 million South African Rand denominated project finance facility awarded
through syndication between Investec Limited and Nedbank Limited. The
remainder of the funds under this facility will be available upon completion
of an independent technical review and the New Order mining right granted to
Burnstone. This facility is collateralized by a first mortgage bond over the
Burnstone project.
Management assessed the Company`s net asset value, forecasted cash flow
resources and future commitments and is confident that the Company will
continue as a going concern.
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 June 30 December31
2008 2007
Canada
Assets other than mineral property
interests 15,691,361 56,796,521
Mineral property interests 1 1
Tanzania
Assets other than mineral property
interests 4,322,031 -
Mineral property interests 31,795,615 -
United States
Assets other than mineral property 17,155,060 5,890,010
interests 95,226,423 95,156,279
Mineral property interests
South Africa
Assets other than mineral property
interests 29,555,521 48,212,597
Mineral property interests 123,360,465 123,257,650
Total assets 329,313,058
317,106,477
5. SUBSEQUENT EVENTS
Subsequent to June 30, 2008,
Puma Gold (Pty) Ltd - acquisition
The Southgold Exploration (Pty) Ltd ("Southgold") purchase agreement entered
into on November 5 2002 included an option to the Company to acquire the
entire shareholding of Puma Gold (Pty) Ltd ("Puma") based on the proven,
probable and/or indicated cumulative reserves of gold included in the
Burnstone property and determined in the feasibility study. The completed
Burnstone feasibility study indicated approximately 435,000 of the ounces in
the additional measured and 29,000 of the ounces in the additional indicated
categories using a 400 cmg/t cut-off.
After negotiations with the Puma shareholders it was decided to enter into a
conventional share acquisition agreement and that the Company (through
Southgold) will acquire Puma for US$ 6 million payable in Great Basin Gold
Ltd common shares.
Following the closing of the transaction on August 2, 2008 the Company will
issue 1,862,354 Great Basin Gold Ltd common shares as consideration for the
purchase price.
The full set of financial statements and Management Discussion and Analysis
are available on Great Basin`s website: www.grtbasin.com
Approved by the Board of Directors
Ferdi Dippenaar Ronald W Thiessen
Director Director
Ground Floor, 138 West Street 1500 Royal Centre, 1055 West
Sandown, Johannesburg Georgia Street,
South Africa Vancouver, BC Canada V6E 4N7
Tel 011 301 1800 Toll Free 1 800 667?2114
Fax 011 301 1840
www.grtbasin.com
13 August 2008
Johannesburg
Sponsor
Nedbank Capital
Date: 13/08/2008 15:00:01 Produced by the JSE SENS Department.
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