| Fri 11 Sep 2009, 16:46 | | GDO - Gold One - Reviewed Consolidated Interim Results For The Six Months |
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GDO
GDO
GDO - Gold One - Reviewed Consolidated Interim Results For The Six Months
Period Ended 30 June 2009
Gold One International Limited
(Previously BMA Gold Limited)
Registered in Western Australia under the Corporations Act 2001 (Cth)
Registration number ACN: 094 265 756
Registered as an external company in the Republic of South Africa
Registration number: 2009/000032/10
Share code on the ASX/JSE: GDO
ISIN: AU000000GDO5
OTCQX International: GLDZY
("Gold One" or the "company")
REVIEWED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS PERIOD ENDED 30 JUNE
2009
DIRECTORS REPORT
The directors present their report on the consolidated entity consisting of
Gold One International Limited and the entities it controlled at the end of,
or during, the half year ended 30 June 2009.
1. DIRECTORS
The names of the directors of the company in office at the date of this
report or during the half-year are:
Mark Wheatley - Appointed 10 July 2006
Neal Froneman - Appointed 14 April 2009
Christopher Chadwick - Appointed 25 May 2009
Barry Davison - Appointed 25 May 2009
Kenneth Dicks - Appointed 25 May 2009
William Harris - Appointed 25 May 2009
Sandile Swana - Appointed 25 May 2009
Kenneth Winters - Appointed 2 August 2005
2. REVIEW AND RESULTS OF OPERATIONS
Gold One International Limited ("Gold One") is a dual primary listed mid-
tier gold resource company that was created through the inward listing
of Australian Securities Exchange ("ASX") listed Gold One (formally BMA
Gold Limited) on the Stock Exchange in Johannesburg, JSE Limited
("JSE"), on 18 May 2009 and the subsequent acquisition by Gold One of
all of the issued ordinary shares in Aflease Gold Limited ("Aflease") by
way of a scheme of arrangement on 25 May 2009.
In addition to Gold One`s listings on the ASX and the JSE its American
Depositary Receipts ("ADR") are also traded in the United States under
the ticker "GLDZY" where each ADR represents 10 ordinary shares.
These interim financial statements report the results of the enlarged
entity for the six months ended 30 June 2009 and its financial position
at that date. The financial statements have been separately prepared for
both the JSE and the ASX as reporting requirements for both exchanges
differ from each other. The Financial Statements prepared for ASX
purposes has been released on the ASX Company`s Announcement platform
and is also available on the company`s website hosted at www.gold1.co.za
The financial statements reflect the progress of Gold One through the
final stages of development of the Modder East project and its pursuit
of both internal growth, through existing exploration projects and
external growth through corporate activity. The results for the six
months are characterised by the transaction costs incurred on the
listing and acquisition of BMA Gold Limited ("BMA") and the non-cash
adjustment for the fair value revaluation of the convertible bonds. As
a result of the reverse acquisition the group has consolidated the
financial results of BMA from 18 May 2009, the date of the acquisition.
Had BMA been consolidated from 1 January 2009, the date of acquisition,
an additional loss of R13 818 million loss before tax would have been
included in the condensed statement of comprehensive income, being the
loss for period 1 January 2009 to 18 May 2009.
The fair value revaluation of the convertible bonds is a non-cash
adjustment to the carrying value of the bonds performed both at year end
and for the interim reporting period. It should however be noted that
the principle value of the bonds is fixed at US$71,598,000 and this
would be the value repaid to the bondholders should the bondholders
redeem or put the bonds under the terms and conditions of the bond
agreements. The underlying bond component, the bondholders put option
and the convertible option are valued by Gold One and reviewed by its
auditors. The bonds are denominated in US Dollars and for this reason
the bond component is sensitive to movement in US interest rates: the
lower the US interest rate, the higher the relative value of the bond
component is in the hands of the bondholders. The value of the bonds
convertible option is highly sensitive to movements in the Gold One
share price both in value terms and in terms of volatility. As the share
price moves closer to the conversion price the convertible option gains
in value for the bondholders. If an increased share price is combined
with high share price volatility, the value of the convertible option
increases more dramatically.
The increase in share price between the Aflease share price at 31
December of ZAR1.10 and the Gold One share price at 30 June 2009 of ZAR
2.18 therefore had a significant impact on the fair value adjustment of
the convertible bonds over the period. The Gold One statement of
comprehensive income will thus in all likelihood continue to see non-
cash movements related to the convertible bond until the expiry of the
instrument.
3. HIGHLIGHTS AND SUBSEQUENT EVENTS
Gold One provided shareholders with an operational update on 31 July
2009, (available on www.gold1.co.za), highlights of which include:
- the establishment of Gold One, an international gold company with a
dual primary listing on the ASX and JSE;
- the completion and commissioning of the Modder East plant on 24
June 2009, ahead of time and under budget;
- a first gold pour from Modder East ore on 21 July 2009, one quarter
ahead of schedule;
- a successful road show raised capital of A$37.5 million by issuing
120 million shares from Australian and International institutions
in August 2009; and
- the commencement of second phase resource drilling at the
Ventersburg Project in July 2009.
4. CHANGE IN SHAREHOLDING
In May 2009 a merger of BMA, an Australian company, and Aflease Group
Limited was accomplished. The Group was renamed Gold One International
Limited. Shares in Aflease Group Limited are now 100% held by Gold One.
5. AUDITORS REVIEW REPORT
The abridged consolidated financial statements for the period ended 30
June 2009 contained in this interim report have been reviewed by
PricewaterhouseCoopers. The Auditors unmodified review report is
available for inspection at the company`s offices.
FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2009
CONDENSED CONSOLIDATED BALANCE SHEET
Reviewed Reviewed Reviewed
30 June 30 June 31 Dec
2009 2008 2008
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment
Mine development costs and mine
plant facilities 876,151 320,476 645,093
Undeveloped properties - 110,645 -
Goodwill 32,729 - -
Held-to-maturity investments 7,784 7,033 7,434
Receivables 111 - -
916,775 438,154 652,527
Current assets
Inventories 8,355 289 289
Trade and other receivables 21,658 268 8,078
Taxation receivable 334 - 524
Short term investments - - 38,379
Held-for-sale Assets 10,495 - -
Cash and cash equivalents 87,963 495,593 254,402
128,805 496,150 301,672
Total assets 1,045,580 934,304 954,199
SHAREHOLDERS` EQUITY
Share capital and share premium 577,659 360,533 401,008
Share-based payment reserve 32,955 10,644 19,682
Accumulated deficit (429,746) (146,423) (171,553)
180,868 224,754 249,137
LIABILITIES
Non-current liabilities
Financial liabilities designated
at fair value 731,191 620,902 608,205
Asset retirement obligation 16,227 7,551 15,241
Deferred taxation 31,681 31,411 31,411
779,099 659,864 654,857
Current liabilities
Trade and other payables 84,301 45,441 50,191
Taxation payable 13 4,245 14
Provisions 86 - -
Liabilities directly associated
with assets held for sale 1,213 - -
85,613 49,686 50,205
Total equity and liabilities 1,045,580 934,304 954,199
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Reviewed Reviewed
30 June 2009 30 June 31 Dec
2008 2008
R`000 R`000 R`000
Revenue - - -
Cost of Sales - - -
Gross profit - - -
Sundry income - - -
General and administrative
expenditure (71,929) (13,161) (36,255)
Exploration and pre-
feasibility expenditure (9,872) (13,073) (29,914)
Profit/ (loss) on forex
transactions 143 - -
Profit/ (loss) on investments (7,712) - -
Profit/ (loss) on sale of -
shares - (49)
Fair value adjustment on (153,526)
Financial liability 684 13,835
Operating loss (242,896) (25,550) (52,383)
Finance income 9,211 33,229 64,107
Finance costs (23,364) (25,073) (53,383)
Loss before income taxes (257,049) (17,394) (41,659)
Income tax expense (1,144) (2,353) (3,218)
Loss for the period (258,193) (19,747) (44,877)
Other comprehensive income:
Currency translation 7,842
differences - -
Other comprehensive income
for the half-year, net of tax 7,842 - -
Total comprehensive income
for the half year (250,351) (19,747) (44,877)
Loss per share (cents)
Basic (42.06) (3.77) (8.51)
Diluted (38.80) (3.68) (8.51)
Number of shares in issue 684,669,076 524,457,006 527,381,180
Reconciliation of weighted average number of shares and diluted average
number of share
Average number of shares 613,913,248 524,186,173 527,381,180
Adjusted for:
Unexercised share options 51,612,357 23,756,709 -
Convertible bonds potentially -
convertible - -
Diluted average number of 665,525,605
shares 547,942,882 527,381,180
HEADLINE LOSS RECONCILIATION
Attributable loss for the (258,193) (19,747) (44,877)
period
Impairment of intangible
Loss on investments 7,712 - -
Headline loss (250,481) (19,747) (44,877)
Weighted average number of
shares in issue 613,913,248 524,186,173 527,381,180
Headline loss per share
(cents) (40.80) (3.77) (8.51)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Reviewed Reviewed Reviewed
30 June 30 June 31 Dec
2009 2008 2008
R`000 R`000 R`000
Cash flows from operating
activities
Payments to suppliers and
employees (83,222) 4,929 (26,938)
Interest paid (23,363) (25,073) (53,383)
Income taxes paid (956) (113) (5,733)
Net cash outflow from operating
activities (107,541) (20,257) (86,054)
Cash flow from investment
activities
Payments for property, plant and
equipment (182,635) (151,477) (359,067)
Proceeds from sale of property, 50
plant and equipment - -
Cash acquired on acquisition (114) - -
Proceeds on sale of investments 38,379 (427) (1,518)
Interest Income 9,564 33,229 64,107
Net cash outflow from investing
activities (134,756) (118,675) (296,478)
Cash flow from financing
activities
Proceeds from issue of shares 75,858 210 257
Net cash inflow from financing
activities 75,858 210 257
Net (decrease) in cash and cash
equivalents (166,439) (138,722) (382,275)
Cash and cash equivalents at
beginning of period 254,402 634,315 636,677
Cash and cash equivalents at end
of period 87,963 495,593 254,402
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
Capital Other Retained Total
and share reserves earnings
premium
R`000 R`000 R`000 R`000
Balance at 01 January
2008 360,323 6,574 126,676 240,221
Loss for the period - - (19,747) (19,747)
Total comprehensive
income for the period - - (19,747) (19,747)
ended 30 June 2008
Share issues 211 - - 211
Share option scheme - 4,070 - 4,070
Transaction cost (1) - - (1)
Balance at 30 June 2008 360,533 10,644 (146,423) 224,754
Balance at 1 January
2009 401,008 19,682 (171,553) 249,137
Profit for the period - - (258,193) (258,193)
Other comprehensive
income:
Currency translation
differences - 7,842 - 7,842
Total comprehensive
income for the period
ended 30 June 2009 - 7,842 258,193 7,842
Share issues 138,379 - - 138,379
Reverse acquisition
adjustment 47,578 - - 47,578
Share option scheme - 5,431 - 5,431
Transaction cost (9,306) - - (9,306)
Balance as at 30 June
2009 577,659 32,955 (429,746) 180,868
CONSOLIDATED CONTINGENT LIABILITIES AND COMMITMENTS
Reviewed Reviewed Reviewed
30 June 30 June 31 Dec
2009 2008 2008
R`000 R`000 R`000
Guarantees 9,370 21,774 26,295
Capital commitments
- Capital expenditure commitments
contracted for 59,252 424,304 69,557
- Capital expenditure commitments
authorised by the Directors but not
yet contracted for
- 473,695 -
Operating lease commitments 7,164 3,907 3,864
1. CORPORATE INFORMATION
The financial report of Gold One International Limited (the Company) for
the interim results for the six months period ended 30 June 2009 was
authorised for issue in accordance with a resolution of the directors.
Gold One International Limited is a company incorporated in Australia
and limited by shares, which are publicly traded on the Australian Stock
Exchange and the JSE Limited.
The nature of the operations and principal activities of the Group are
described in the Directors` Report.
BMA acquired Aflease Gold Limited and its controlled entities on 25 May
2009. In accordance with IFRS 3 Business Combination, this acquisition
was determined to be a "reverse acquisition". In a reverse acquisition,
the legal acquirer becomes the accounting subsidiary and the legal
acquiree becomes the accounting parent. Therefore comparative
information provided in this report will be that of the former Aflease
Gold Limited entity.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The interim financial
report does not include all notes of the type normally included within
the annual financial report and therefore cannot be expected to provide
as full an understanding of the financial performance, financial
position and financing and investing activities of the consolidated
entity as the full financial report.
It is also recommended that the interim financial report be considered
together with any public announcements made by Gold One International
Limited and its controlled entities during the half-year ended 30 June
2009 in accordance with the continuous disclosure obligations arising
under the Corporations Act 2001.
a) Basis of Preparation
The interim consolidated financial report has been prepared in
accordance with IAS 34 Interim Financial Reporting. The interim
financial report has been prepared on a historical cost basis. The
interim consolidated report of Gold One International Limited and its
subsidiaries have been prepared in accordance with International
Financial Reporting Standards ("IFRS").
For the purpose of preparing the interim financial report, the six
months results have been treated as a discrete reporting period.
Principles of consolidation
These interim financial statements present the consolidated financial
statements of the Gold One International Limited Group. The Group only
consists of 100% held subsidiaries.
Subsidiaries
Subsidiaries are all entities (including special purpose entities) over
which the Group has the power to govern the financial and operating
policies generally accompanying a shareholding of more than one half of
the voting rights. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity. Subsidiaries are
fully consolidated from the date on which control is transferred to the
Group. They are no longer consolidated from the date that control
ceases.
The purchase method of accounting is used to account for the acquisition
of subsidiaries by the Group. The cost of an acquisition is measured as
the fair value of the assets given, equity instruments issued and
liabilities incurred or assumed at the date of exchange, plus costs
directly attributable to the acquisition. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date, irrespective of the extent of any minority interest.
The excess of the cost of acquisition over the fair value of the Group`s
share of the identifiable net assets acquired is recorded as goodwill.
If the cost of acquisition is less than the fair value of the net assets
of the subsidiary acquired, the difference is recognised directly in the
statement of comprehensive income.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised losses
are also eliminated but considered an impairment indicator of the asset
transferred. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency
with the policies adopted by the Group.
The stand-alone Company accounts for its investments in subsidiaries at
cost.
Business combination
A business combination is a transaction or other event in which an
acquirer obtains control of one or more subsidiaries. An acquirer shall
be identified for all business combinations. The acquirer is the
combining entity that obtains control of the other combining entities or
businesses.
A reverse acquisition occurs when the acquirer is the entity whose
equity interests have been acquired and the issuing entity is the
acquiree. This might be the case when, a private entity arranges to
have itself `acquired` by a smaller public entity as a means of
obtaining a stock exchange listing. Although legally the issuing entity
is regarded as the parent and the private entity is regarded as the
subsidiary, the legal subsidiary is the acquirer if it has the power to
govern the financial and operating policies of the legal parent so as to
obtain benefits from its activities.
In a reverse acquisition, the cost of the business combination is deemed
to have been incurred by the legal subsidiary in the form of equity
instruments issued to the owners of the legal parent. The published
price of the equity instruments of the acquirer is used to determine the
cost of the combination, and a calculation shall be made to determine
the number of equity instruments the acquirer would have to issue to
provide the same percentage ownership interest of the combined entity to
the owners/shareholder of the acquire as they have in the combined
entity as a result of the reverse acquisition. The fair value of the
number of equity instruments so calculated shall be used as the cost of
combination.
Acquisition-related costs are costs the acquirer incurs to effect the
business combination. These costs include finder`s fees, advisory,
legal, accounting, valuation and other professional or consulting fees,
general administrative costs, including the costs of maintaining an
internal acquisitions departments and costs of registering and issuing
debt and equity securities. The acquirer shall account for acquisition-
related costs as expenses in the period in which the costs are incurred
and the services are received, with one exception. The costs to issue
debt or equity securities shall be set-off against equity, namely,
against the share premium in terms of the South African Companies Act
and share capital in terms of the Australian requirements.
Foreign currency translation
i) Functional and presentation currency
Items included in the financial statements of each entity in the Group
are measured using the currency that best reflects the economic
substance of the underlying events and circumstances relevant to that
entity ("the functional currency"). The consolidated financial
statements are presented in South African Rand (ZAR). The functional
currency of the company and its subsidiaries is also the South African
Rand (ZAR).
ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation of monetary
assets and liabilities denominated in foreign currencies, are recognized
in the statement of comprehensive income.
iii) Group companies
The results and financial position of all the Group entities (none of
which has the currency of a hyperinflationary economy) that have a
functional currency different from the presentation currency are
translated into the presentation currency as follows:
- Assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance sheet,
- Income and expenses for each statement of comprehensive income are
translated at average exchange rates (unless this is not a
reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transactions), and
- All resulting exchange differences are recognised as a separate
component of equity.
On consolidation, exchange differences arising from the translation of
any net investment in foreign entities, and of borrowings and other
financial instruments designated as hedges of such investments, are
taken to shareholders` equity. When a foreign operation is sold or any
borrowings forming part of the net investment are repaid, a
proportionate share of such exchange differences are recognised in the
statement of comprehensive income, as part of the gain or loss on sale
where applicable.
Property, plant and equipment
Mining assets
Mine development and plant facilities
Mine and plant development costs are capitalised to the extent that they
provide access to ore bodies and have future economic benefit. These
costs include the purchase price (including duties and non-refundable
taxes) of assets used in the construction of the mine, costs directly
related to develop the mine asset for its intended use and the present
value of the initial estimate of future costs of rehabilitating the
land. Other costs capitalised to the asset are direct costs incurred in
the development of the mine and plant and indirect costs that can be
directly attributable to the development of the mine and plant.
Depreciation of other assets used in the development of the mine and
plant are also capitalised. All mine and plant start-up costs and
incidental income earned during development are capitalised. The above
costs are capitalised until the ore body is available for intended use,
at which time the asset is depreciated and further costs are expensed.
Mine assets are initially recorded at cost, whereafter they are measured
at cost less accumulated depreciation and accumulated impairment.
Undeveloped properties
Undeveloped properties are initially valued at the fair value of
resources obtained through acquisitions. These properties are tested
for impairment as part of their relevant cash generating units.
Mineral and surface rights
Mineral and surface rights are recorded at cost of acquisition. When
there is little likelihood of a mineral right being exploited, or the
value of mineral rights have diminished below cost, an impairment loss
is recognised against income in the period that such determination is
made.
Mining exploration
Exploration costs are expensed as incurred. When a decision is made
that commercial production on a mining property should commence, all
further pre-production expenditures are capitalised. These costs include
evaluation costs.
Depreciation of mining assets
Depreciation of mine development and plant facilities and mineral and
surface rights are computed principally by the units of production
method based on estimated proved and probable reserves. To the extent
that these costs benefit the entire ore body, they are depreciated over
the estimated life of the ore body. Depreciation is first charged on
mining ventures from the date on which the mining ventures are available
for intended use.
Non-mining assets
Non-mining assets
Land is shown at cost and not depreciated. Other non-mining fixed assets
are shown at historical cost less accumulated depreciation and
accumulated impairment losses. Historical costs includes expenditure
that is directly attributable to the acquisition of the items.
Depreciation of non-mining assets
Included in non-mining assets are motor vehicles, computer equipment and
office equipment. These assets are depreciated on a straight-line basis
to allocate their cost to their residual values over their estimated
useful lives as follows:
- Motor vehicles 3 - 10 years
- Computer equipment 3 years
- Office equipment 3 - 10 years
Subsequent costs are included in the asset`s carrying amount or
recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. The carrying
amount of the replaced part is derecognised. All other repairs and
maintenance are charged to the statement of comprehensive income during
the financial period in which they are incurred.
The assets` residual values and useful lives are reviewed and adjusted
if appropriate, at each balance sheet date.
An asset`s carrying amount is written down immediately to its
recoverable amount if the asset`s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with
carrying amount and are recognised in the statement of comprehensive
income.
Goodwill
The cost of acquisition is allocated to the fair value of assets and
liabilities of the acquiree. The excess of the cost of acquisition over
fair value is recorded as goodwill. If the fair value of assets and
liabilities exceed the cost of acquisition, the cost will be reassessed
and then recorded in Profit and Loss in the consolidated statement of
comprehensive income. Deferred tax on the difference between the fair
value and carrying value of assets and liabilities is considered and
accounted for.
Financial assets and financial liabilities
Classification
The Group classifies its financial assets and financial liabilities in
the following categories: at fair value through profit or loss, loans
and receivables, and available for sale. The classification depends on
the purpose for which the financial assets were acquired. Management
determines the classification of its financial assets at initial
recognition.
a) Financial assets and financial liabilities at fair value through
profit or loss
Financial assets and financial liabilities at fair value through profit
or loss are classified as financial assets and financial liabilities
held for trading. A financial asset or financial liability is
classified in this category if acquired principally for the purpose of
selling in the short term. The Group has short-term investments
classified in this category. A financial asset or financial liability
may be designated at fair value through profit or loss at initial
recognition if it contains one or more embedded derivatives. The Group
has designated the convertible bonds as a financial liability through
profit and loss.
b) Held-to-maturity financial assets and financial liabilities
Held-to-maturity financial assets are non-derivative financial assets
with fixed or determinable payments and fixed maturities that the
Group`s management has the positive intention and ability to hold to
maturity. If the Group were to sell other than an insignificant amount
of held-to-maturity financial assets, the whole category would be
tainted and reclassified as available for sale. Held-to-maturity
financial assets are included in non-current assets, except for those
with maturities less than 12 months from the balance sheet date, which
are classified as current assets. The Group has long-term investments
which are classified in this category.
(c) Loans and receivables
Loans and receivables are non-derivative financial assets and financial
liabilities with fixed or determinable payments that are not quoted in
an active market. They are included in current assets or current
liabilities, except for maturities greater than 12 months after the
balance sheet date. These are classified as non-current assets or non-
current liabilities. The Group`s loans and receivables comprise trade
and other receivables, cash and cash equivalents and trade and other
payables in the consolidated balance sheet.
(d) Available -for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either
designated in this category or not classified in any of the other
categories. They are included in non-current assets unless management
intends to dispose of the investment within 12 months of the balance
sheet date.
Recognition and measurement
Regular purchases and sales of financial assets and financial
liabilities are recognised on the trade date - the date on which the
Group commits to purchase or sell the asset. Investments are initially
recognised at fair value plus transaction costs for all financial assets
and financial liabilities not carried at fair value through profit or
loss. Financial assets and financial liabilities carried at fair value
through profit or loss are initially recognised at fair value and
transaction costs are expensed in the statement of comprehensive income.
Available-for-sale financial assets and liabilities; and financial
assets and financial liabilities at fair value through profit or loss
are subsequently carried at fair value. Loans and receivables are
carried at amortised cost using the effective interest method. Financial
assets and financial liabilities are derecognised when the rights to
receive cash flows from the investments have expired or have been
transferred and the Group has transferred substantially all risks and
rewards of ownership.
Gains or losses arising from changes in the fair value of the financial
assets and financial liabilities are presented in the statement of
comprehensive income in the period in which they arise. Dividend income
from financial assets at fair value through profit or loss is recognised
in the statement of comprehensive income as part of other income when
the Group`s right to receive payments is established.
The fair values of quoted investments are based on current bid prices.
If the market for a financial asset or financial liability is not active
(and for unlisted securities for example), the Group establishes fair
value by using valuation techniques. These include the use of recent
arm`s length transactions, reference to other instruments that are
substantially the same, discounted cash flow analysis, and option
pricing models making maximum use of market inputs and relying as little
as possible on entity-specific inputs.
The Group assesses at each balance sheet date whether there is objective
evidence that a financial asset or a group of financial assets are
impaired whenever there is an impairment indicator. In the case of
loans and receivables and held-to-maturity maturity investments carried
at amortised cost, the amount of the loss is measured as the difference
between the asset`s carrying amount and the present value of estimated
future cash flows discounted at the original effective interest rate.
The impairment loss will be recognised in the statement of comprehensive
income. Available-for-sale financial assets for which there is objective
evidence of impairment and for which a cumulative loss has been
recognised in equity will be removed from equity and recognised in the
statement of comprehensive income. Impairment losses recognised in the
consolidated statement of comprehensive income on equity instruments are
accounted for in equity.
Inventories
Inventories include spares and consumables stated at the lower of cost
or net realisable value. Cost of spares and consumables include the
purchase price, import duties and other taxes, transport, handling and
all other costs directly attributable in to the acquisition of the
spares and consumables. Spares and consumables are valued on the
weighted average basis. Net realisable value is the estimated selling
price in the ordinary course of business, less applicable variable
selling expenses.
Trade receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest
method, less provision for impairment. A provision for impairment of
trade receivables is established when there is objective evidence that
the Group will not be able to collect all amounts due according to the
original terms of the receivables. Significant financial difficulties of
the debtor, probability that the debtor will enter bankruptcy, (or
similar work out or windup procedure) or financial reorganisation, and
default or delinquency in payments (more than 30 days overdue) are
considered indicators that the trade receivable is impaired. The amount
of the provision is the difference between the asset`s carrying amount
and the present value of estimated future cash flows, discounted at the
original effective interest rate. The carrying amount of the asset is
reduced through the use of an allowance account and the amount of the
loss is recognised in the statement of comprehensive income. When a
trade receivable is uncollectible, it is written off against the
allowance account for trade receivables. Subsequent recoveries of
amounts previously written off are credited in the statement of
comprehensive income.
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, bank balances,
deposits held at call and certificate of deposits with an original
maturity of three months or less. Bank and cash balances are reported
separately from bank overdraft balances.
Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to
amortisation and tested annually for impairment. Assets that are subject
to depreciation are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which
the asset`s carrying amount exceeds its recoverable amount. The
recoverable
amount is the higher of an asset`s fair value less costs to sell and
value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable
cash flows (cash-generating units). Non-financial assets other than
goodwill that suffered impairment are reviewed for possible reversal of
the impairment at each reporting date.
Contributed equity
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity
as a deduction, net of tax, from the proceeds.
Equity instruments issued by the Group are recorded at the proceeds
received, net of direct issue costs.
Recognition of deferred day one profit and loss
The Group has issued a convertible bond, which will mature 5 years after
issue, where fair value is determined using valuation models for which
not all inputs are market observable prices or rates. The convertible
bond was initially recognised at the transaction price. The difference
between the transaction price and the model value is recognised
immediately in profit and loss.
The timing of recognition of deferred day one profit and loss is
determined individually. It is either amortised over the life of the
transaction, deferred until the instrument`s fair value can be
determined using market observable inputs, or realised through
settlement. The financial instrument is subsequently measured at fair
value, adjusted for the deferred day one profit and loss. Subsequent
changes in fair value are recognised immediately in the statement of
comprehensive income without reversal of deferred day one profits and
losses. The Group has elected to amortise the deferred day one profit
and loss over the life of the transaction.
Asset retirement obligations
The Group recognizes the best estimate of the future asset retirement
obligation as a liability in the year in which it incurs a legal or
constructive obligation associated with the retirement of tangible long-
lived assets that results from the acquisition, construction,
development, and/or normal use of the assets. The Group concurrently
recognizes a corresponding increase in the carrying amount of the
related long-lived asset that is depreciated over the life of the asset.
The present value of the asset retirement obligation is reviewed
annually using the expected cash flow approach that reflects a range of
possible outcomes discounted at credit adjusted risk-free interest rate.
The present value is provided for in full for the estimated future costs
of pollution control and rehabilitation, in accordance with
environmental and regulatory requirements.
Subsequent to the initial measurement, the asset retirement obligation
is adjusted at the end of each year to reflect the passage of time and
changes in the estimated future cash flows underlying the obligation.
Changes in the obligation due to the passage of time are recognized in
the statement of comprehensive income as a financing cost using the
discounted cash flow method. Changes in the obligation due to changes in
estimated cash flows are recognized as an adjustment to the carrying
amount of the long-lived asset that is depreciated over the remaining
life of the asset.
The rehabilitation asset will be amortised over the life of the mine
once the mine development is complete.
Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax
is recognised in the statement of comprehensive income, except to the
extent that it relates to items recognised directly in equity. In this
case, the tax is also recognised in equity.
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the balance sheet date in the
countries where the Group`s subsidiaries and associates operate and
generate taxable income. Management periodically evaluates positions
taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions
where appropriate on the basis of amounts expected to be paid to the tax
authorities.
Deferred income tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial
statements. However, the deferred income tax is not accounted for if it
arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of the
transaction affects neither the accounting nor the taxable profit or
loss. Deferred income tax is determined using tax rates (and laws) that
have been enacted or substantially enacted by the balance sheet date and
are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is
probable that future taxable profit will be available against which the
temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on
investments in subsidiaries and associates, except where the timing of
the reversal of the temporary difference is controlled by the Group and
it is probable that the temporary difference will not reverse in the
foreseeable future.
The Group utilizes the asset and liability method of accounting for
income and mining taxes. Under the asset and liability method, future
income and mining tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities
and their respective tax bases reduced by a valuation allowance to
reflect the recoverability of any future income tax asset. Future income
and mining tax assets and liabilities are measured using enacted or
substantively enacted tax rates expected to apply when the asset is
realized or the liability settled. The effect on future income and
mining tax assets and liabilities of a change in tax rates is recognized
in income in the year that enactment or substantive enactment occurs.
Trade payables
Trade payables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method.
Revenue recognition
Interest income is recognized on a time proportion basis, taking account
of the principal outstanding and the effective rate over the period to
maturity, when it is determined that such income will accrue to the
Group.
Employee benefits
(i) Share-based compensation
The Group operates an equity-settled, share-based compensation plan,
under which the Group receives services from employees as consideration
for equity instruments (options) of the Group. The fair value of the
employee services received in exchange for the grant of the options is
recognised as an expense.
The total amount to be expensed is determined by reference to the fair
value of the options granted, excluding the impact of any non-market
services and performance vesting conditions. Non-market vesting
conditions are included in assumptions about the number of options that
are expected to vest. The total amount expensed is recognised over the
vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At each balance sheet date, the
Group revises its estimates of the number of options that are expected
to vest based on the non-marketing vesting conditions. It recognises
the impact of the revision to original estimates, if any, in the
statement of comprehensive income, with a corresponding adjustment to
equity.
The proceeds received net of any directly attributable transactions
costs are credited to share capital (nominal value) and share premium
when the options are exercised. The value of the reserve remains
unchanged when options are exercised.
(ii) Profit-sharing and bonus plans
The Group recognises a liability and an expense for bonuses and profit-
sharing, based on a formula that takes into consideration the profit
attributable to the Group`s shareholders after certain adjustments. The
Group recognises a provision where contractually obliged or where there
is a past practice that has created a constructive obligation.
Leased assets
Leases of property, plant and equipment where the Group has
substantially transferred all the risks and rewards of ownership are
classified as finance leases. Finance leases are capitalised at the
inception of the lease at the lower of the fair value of the leased
property or the present value of the minimum lease payments. Each lease
payment is allocated between the liability and finance charges so as to
achieve a constant rate on the finance balance outstanding. The
corresponding rental obligations, net of finance charges, are included
in other long-term payables. The interest element of the instalment is
charged to the statement of comprehensive income over the lease period
so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The property, plant and
equipment acquired under finance leases are depreciated over the shorter
of the useful life of the asset or the lease term.
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating leases.
Payments made under operating leases (net of any incentives received
from the lessor) are charged to the statement of comprehensive income on
a straight-line basis over the period of the lease.
Segmental reporting
Business segments are subject to risks and returns that are different
from those of other business segments. Geographical segments are engaged
in providing products or services within a particular economic
environment that is subject to risks and returns that are different from
those operating in other economic environments. Segments identified are
East Rand, Free State, Namibia and Mozambique. Activities during the
period under review were mainly East Rand activities. The activities in
the other regions were immaterial and did not justify additional
disclosure.
Critical accounting estimates and judgments
Estimates and judgments are continually evaluated and are based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances.
The Group makes estimates and assumptions concerning the future. The
resulting account estimates will, by definition, seldom equal the
related actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are
addressed below:
Fair value of financial instruments
The fair value of financial instruments that are not traded in an active
market (for example, over-the-counter derivatives) is determined by
using valuation techniques. The Group uses its judgment to select a
variety of methods and make assumptions that are mainly based on market
conditions existing at each balance sheet date.
(i) Share-based payment reserve
Share based payments are calculated at fair value at the date granted
and recognised as an expense over the vesting period. The Group uses
certain assumptions as inputs into the valuation model.
(iii) Measurement of retirement obligation
The present value of the asset retirement obligation is calculated
annually using the expected cash flow approach that reflects a range of
possible outcomes discounted at credit adjusted risk-free interest rate.
(iv) Fair value of financial liabilities
The convertible bond is valued as the sum of two components, a bond-
floor component and an embedded option component. The bond floor
represents the value of the bond assuming that there were no borrower
conversion options or issuer redemption options granted on it. The
embedded option component represents the additional value of the
conversion option granted to the borrower as well as the redemption
option that the issuer holds. The change in value of the convertible
bond is taken to the Statement of Comprehensive Income as a fair value
adjustment on financial liability. The Group uses a valuation model
which uses certain assumptions as inputs, which are listed below:
Item Value
Spot price (USD/ZAR) 0.28
Strike price (USD/ZAR) 0.39
Risk free rate 2.42%
Volatility 72%
3. FINANCIAL LIABILITIES
Financial liabilities consist of convertible bonds classified as
financial liabilities at fair value through profit and loss.
30 June 31 Dec
2009 2009
R`000 R`000
Fair value of convertible 731,191 608,205
bond
At the end of the 731,191 608,205
period
Reconciliation of 30 June 31 Dec
convertible bond: 2009 2008
R`000 R`000
Face value of convertible bond 600,000 600,000
issued
Movement through profit 131,191 8,205
and loss
Balance at 30 June 2009 731,191 608,205
On 25 May 2009, the issued 600 8.5% convertible bonds at a nominal value of R
1 million per bond were replaced by 600 8.5% convertible bonds at a total
nominal value of US $ 71.598 million. The bonds mature 5 years from the
original issue date at the redemption value of 109.6% of the nominal value
unless converted into the Group`s ordinary shares at the holder`s option, at
any time during the conversion period. All or some of the bonds can be
converted at a fixed rate of 266,058 shares per bond. However in the
circumstance that continuous production has not commenced by 31 March 2010 on
the Modder East Mine, the conversion rate will be recalculated on the reset
date using a formula based on the Group`s share price at that date. The
effective yield to maturity of the instrument is 10%.
At any time on or after 12 December 2009 the Group may redeem all, but not
some only, of the bonds for the time being outstanding at their accreted
principal amount, which represents on the relevant date a gross yield to
maturity identical to that applicable in the case of redemption on the
Maturity date, together with interest accrued to the date fixed for
redemption. This option is exercisable only if the market value of the
ordinary shares has accreted with more than 150% of the conversion price.
In addition, the Group has the option to redeem all the bonds, and not some
only, at any time, at their accreted principal amount together with interest
accrued to the date fixed for redemption, if 85% or more of the originally
issued bonds have been exercised and/or purchased and cancelled.
The holder has the option to put the bond to the Group at the accreted
principal amount plus accrued interest on the third anniversary of the
closing date, being 12 December 2010.
Certain debt covenants exist over the convertible bond.
So long as any of the bonds remain outstanding, the Group will not create or
permit to subsist any mortgage, charge, lien, pledge or other form of
encumbrance or security interest upon the whole or any part of its/their
present or future property or assets, revenues present or future to secure
any Indebtedness or any guarantee or indemnity in respect of any Indebtedness
unless they comply with specific rules set out in the convertible bond
agreement.
The Group`s convertible bonds are denominated in US dollars and are subject
to foreign currency exposure.
4. CONTINGENT LIABILITIES AND COMMITMENTS
(i) Mining and Exploration Tenements
In order to maintain rights of tenure on mining and exploration tenements,
the Company and the consolidated entity are required to outlay certain annual
expenditures.
(ii) Termination Agreements
The economic entity has contingent liabilities in respect of termination
benefits which may arise pursuant to employment agreements entered into with
executives and employees who take part in the management of the economic
entity. Accordingly no provision has been made in the accounts as no
executive has been terminated.
30 Jun 31 Dec
2009 2008
R`000 R`000
Guarantees 9,370 26,295
Capital 59,252 69,557
commitments
Operating lease 7,119 3,856
commitments
Capital commitments
30 Jun 31 Dec
2009 2008
R`000 R`000
Capital expenditure commitments contracted 59,252 69,557
for
Payable in
- 2009 43,025 53,330
- 2010 - -
- 2011 - -
- 2012 - -
- Thereafter 16,227 16,227
The Group capital commitment relates to capital expenditure on the Modder
East projects as well as the asset rehabilitation liability, it includes the
board approved capital expenditure on the development of the Sub Nigel Gold
Mine as included under the company commitments.
Operating leases 30 31 Dec
Jun
2009 2008
R`000 R`000
The future aggregate minimum lease payment
under non-cancellable operating leases are:
No later than 1 602 91
year
Later than one year but no later 3,401 557
than 5 years
Later than 5 3,116 3,208
years
7,119 3,856
5. SEGMENT INFORMATION
The company operates in one business segment, mining, and in two geographic
segments, being Australia and South Africa. The company considers the
business segment to be its primary business segment.
6. EVENTS SUBSEQUENT TO BALANCE DATE
Issue of Shares
On 08 July 2009 the Company issued shares of 230,240 to Tulo at an issue
price of 217.165 ZAR cents as payment of the third instalment of the
consideration for Aflease Gold Limited`s (now a wholly owned subsidiary of
Gold One) acquisition of Noble Trade and Commerce Limitada in 2008. Noble
Trade and Commerce Limitada holds Gold One`s Tulo project in Mozambique.
Sale of Twin Hills Assets
On 1 July 2009, the Company announced the sale of it`s Twin Hills assets to
in North Queensland to North Queensland Metals Limited (ASX: NQM) and
Heemskirk Consolidated Limited (ASX: HSK) (in proportions of 60% and 40%,
respectively) for A$1.75 million.
Drilling Commences at Ventersburg Project
On 17 July 2009 the Company announced that drilling had commenced on the
Ventersburg project located in the Witwatersrand basin in the prolific Free
State province of South Africa.
First Gold Poured from Modder East
The Company on 22 July 2009 announced that it had poured the first gold using
underground ore from its Modder East project.
For further detail on the above announcements, readers are directed to the
company`s website at www.gold1.co.za
Issue of Shares and Capital Raising
The Company announced on 4 September 2009 that it had issued 86,400,000
shares under a capital raising which was announced to the market on 24 June
2009. The issue raised R 176 million in gross proceeds.
7. BUSINESS COMBINATIONS
BMA acquired Aflease Gold Limited and its controlled entities on 25 May 2009.
In accordance with IFRS 3 Business Combination, this acquisition was
determined to be a "reverse acquisition". In a reverse acquisition, the legal
acquirer becomes the accounting subsidiary and the legal acquiree becomes the
accounting parent.
As a result of the reverse acquisition, the statement of comprehensive income
of the consolidated entity for the six months ended 30 June 2009 comprises
the results of the combined group.
Details of the fair value of the assets and liabilities acquired and goodwill
are as follows:
R`000
Purchase 47,578
consideration
Fair value of assets (14,849)
acquired
Goodwill 32,729
Pre- Fair value Recognised
acquisition adjustments values on
carrying acquisition
amounts
R`000 R`000 R`000
Cash 2,510 - 2,510
Property Plant 1,444 4,153 5,597
and Equipment
Exploration, Evaluation 9,705 (3,235) 6,470
and Development
Deferred taxation - 272 272
Net identifiable assets 13,659 1,190 14,849
and liabilities
Gold One International Limited issued 660,517,784 ordinary shares to acquire
Aflease Gold Limited and it`s subsidiaries.
Pre acquisition carrying amounts were determined based on applicable IFRS`s
immediately before the acquisition. The values of assets and liabilities
recognised on acquisitions are their estimated fair values
DIRECTORS` DECLARATION
In accordance with a resolution of the directors of Gold One International
Limited, I state that:
In the opinion of directors:
a) the financial statements and notes of the consolidated entity are
in accordance with the Corporations Act 2001, including :
i. give a true and fair view of the financial position as at 30 June
2009 and the performance for the half-year ended on that date of
the consolidated entity; and
ii. comply with Accounting Standard AASB 134 "Interim Financial
Reporting" and the Corporations Regulation 2001; and
b) there are reasonable grounds to believe that the Company will be
able to pay its debts as and when they become due and payable.
On behalf of the Board
Neal Froneman
Chief Executive Officer
Dated: 13 September 2009
Johannesburg, South Africa
BOARD OF DIRECTORS
Mark Wheatley* (Chairman), Neal Froneman (CEO), Christopher Chadwick (CFO),
Izak Marais (COO), Barry Davison*, Ken Dicks*, William Harris*, Sandile
Swana*, Ken Winters*
*Non-executive Directors
SENIOR MANAGEMENT
Syd Caddy (Snr. Vice President: Projects), Jost Barenberg (Vice President:
Mining), Warwick Bullen (Vice President: Mineral Resource Management), Ilja
Graulich (Vice President: Corporate Affairs), Pierre Kruger (Vice President:
Legal Counsel & Company Secretary), Amanda Markman (Vice President: Corporate
Development), Johann Mouton (Vice President: Metallurgy), Adrian Reynolds
(Vice President: Projects), Richard Stewart
(Vice President: Geology), Piet van Straaten
(Vice President: Exploration).
CORPORATE DIRECTORY
REGISTERED OFFICE
Level 3
100 Mount Street
NORTH SYDNEY NSW 2060
Telephone: 61 2 9963 6400
Facsimile: 61 2 9963 6499
JOHANNESBURG CORRATE OFFICE
45 Empire Road, First Floor,
Parktown, 2193
Gauteng, South Africa
Telephone: 27 11 726 1047
Facsimile: 27 11 726 1087
AUDITORS
PricewaterhouseCoopers (Australia)
SHARE REGISTRY (Australia)
Registries Limited
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
SPONSOR
Macquarie First South Advisers (Pty) Ltd
Date: 11/09/2009 16:46:02 Produced by the JSE SENS Department.
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