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GBG
GBG
GBG - Great Basin Gold Limited - Audited Consolidated Financial Statements for
the Years Ended December 31, 2009 And 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")
AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009
AND 2008
CONSOLIDATED BALANCE SHEETS
As at December 31, 2009 and 2008
(Expressed in Canadian Dollars)
December 31 December 31
2009 2008
$ $
Assets
Current assets
Cash and cash equivalents 89,464,362 33,549,118
Amounts receivable 5,053,346 4,940,950
Inventory 26,312,072 8,246,093
Available-for-sale financial 4,960,683 899,624
instruments
Held-for-trading financial
instruments 207,452 79,960
Other assets 3,302,634 5,867,183
Due from related parties - 23,174
129,300,549 53,606,102
Property, plant and equipment 191,474,362 48,849,185
Reclamation deposits 4,590,267 2,886,539
Mineral property interests 222,918,688 259,858,656
Total assets 548,283,866 365,200,482
Liabilities and Shareholders`
Equity
Current liabilities
Accounts payable and accrued
liabilities 29,206,015 26,276,562
Due to related parties - 252,854
Current portion of long term
borrowings 43,768,157 916,745
72,974,172 27,446,161
Long term borrowings 86,947,674 62,060,594
Future income taxes 10,659,240 14,747,392
Site reclamation obligations 3,990,230 3,738,380
101,597,144 80,546,366
Shareholders` equity
Share capital 567,596,040 428,656,646
Warrants 13,103,653 24,005,896
Contributed surplus 83,266,446 21,599,521
Deficit (265,712,738) (217,267,111)
Accumulated other comprehensive
(loss)income (24,540,851) 213,003
373,712,550 257,207,955
Total liabilities and shareholders`
equity 548,283,866 365,200,482
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the years ended December 31, 2009 and 2008
(Expressed in Canadian Dollars)
Years ended December 31
2009 2008
$ $
Revenue 33,737,518 24,716,323
(Expenses) income
Production cost (20,614,777) (18,177,231)
Depletion charge (3,178,627) (6,344,218)
Exploration expenses (16,592,052) (23,902,737)
Pre-development expenses (25,868,727) (62,597,563)
Accretion of reclamation obligation (83,211) (31,722)
Conference and travel (1,553,685) (1,607,065)
Corporate social responsibility (1,084,425) -
Environmental impact study (982,591) -
Foreign exchange gain (loss) 2,548,889 (2,737,378)
Legal, accounting, and audit (883,575) (1,759,612)
Mineral properties written off (154,065) -
Office and administration (4,150,504) (7,396,242)
Other income 92,702 176,877
Salaries and compensation
Salaries and wages (6,628,032) (6,844,782)
Stock-based compensation (8,283,947) (9,082,504)
Shareholder communications (500,639) (698,978)
Trust and filing (335,651) (664,131)
Loss before the undernoted and (54,515,399) (116,950,963)
income taxes
Loss (gain) on sale of assets (14,520) 173,490
Transaction cost - (18,768)
Interest expense (144,265) (1,273,694)
Interest income 2,910,980 2,357,564
Loss from associate - (351,446)
Net unrealized loss on held-for- (2,214,776) (753,040)
trading financial instruments
Loss before income taxes (53,977,980) (116,816,857)
Future income tax recovery 5,532,353 31,944,779
Loss for the year (48,445,627) (84,872,078)
Other comprehensive loss
Unrealized gain(loss)on available- 3,025,751 (2,701,263)
for-sale financial instruments
Unrealized (loss) gain on foreign (27,779,605) 2,311,394
exchange translation of self-
sustaining foreign operations
Other comprehensive loss (24,753,854) (389,869)
Total comprehensive loss for the (73,199,481) (85,261,947)
year
Basic and diluted loss per share (0.16) (0.40)
Weighted average number of common
shares outstanding 310,068,448 211,282,760
CONSOLIDATED STATEMENTS OF SHAREHOLDERS`EQUITY AND DEFICIT
(Expressed in Canadian Dollars)
Year ended Year ended
December 31, 2009 December 31, 2008
$ $
Shares Shares
Common shares
Balance at 428,656,646 390,139,711
beginning of 215,166,542 203,395,902
year
Equity line: 3,910,984 -
shares issued
for cash, net of
share issue cost 2,846,800 -
Public offering: 132,699,566 -
shares issued
for cash, net of
share issued 115,000,000 -
costs
Share purchase 2,293,644 6,731,694
options 1,124,675 2,250,386
exercised
Shares issued 35,200 29,700
for mineral
properties 20,000 10,000
Shares issued - - 6,613,636 22,787,802
for Rusaf Gold
Limited, April
2008
Shares issued - 76,923
for Rusaf Gold
Limited, July
2008 - 22,041
Shares issued - 6,648,604
for Puma Gold
(Pty) Ltd, July - 1,862,354
2008
Rusaf share - 18,409
purchase
warrants
exercised, - 13,333
October 2008
Share purchase - 2,223,803
warrants
exercised - 998,890
Balance at end 567,596,040 428,656,646
of the year 334,158,017 215,166,542
Share purchase Warrants
warrants Warrants
Balance at
beginning of the
year 49,180,312 24,005,896 31,433,202 17,934,934
Warrants issued - 6,616,856
pursuant to
Senior Secured
Notes 8,248,240 18,746,000
Warrants issued 5,307,983 -
pursuant to
public offering,
net of share
issue costs 57,500,000 -
Exercised - - (998,890) (545,894)
Expired (28,750,000) (16,210,226) - -
Balance at end 13,103,653 24,005,896
of year 86,178,552 49,180,312
Contributed
surplus
Balance at 21,599,521 11,509,102
beginning of the
year
Stock-based 12,104,310 10,411,804
compensation
Share purchase
options
exercised,
credited to
share capital (809,167) (2,076,452)
Rusaf share - (8,409)
purchase options
exercised,
credited to
share capital
Fair value of 16,210,226 -
share purchase
warrants expired
Future income (1,293,750) -
tax on expired
share purchase
warrants
Convertible bond 35,455,306 -
equity component
Options and - 1,763,476
warrants issued
on acquisition
of Rusaf Gold
Limited
Balance at end 83,266,446 21,599,521
of the year
Deficit
Balance at beginning (217,267,111) (132,395,033)
of the year
Net loss for the (48,445,627) (84,872,078)
year
Balance at end of (265,712,738) (217,267,111)
the year
Accumulated other
comprehensive
(loss)income
Balance at beginning 213,003 602,872
of the year
Unrealized 3,025,751 (2,701,263)
gain(loss) on
available-for-
sale financial
instruments
Accumulated (27,779,605) 2,311,394
unrealized
(loss)gain on
foreign exchange
translation of self-
sustaining foreign
operations
Balance at end of (24,540,851) 213,003
the year
TOTAL SHAREHOLDERS` 373,712,550 257,207,955
EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2009 and 2008
(Expressed in Canadian Dollars)
Years ended December 31
2009 2008
$ $
Operating activities
Loss for the year (48,445,627) (84,872,078)
Items not involving cash
Depreciation 3,190,944 3,100,780
Future income tax recovery (5,540,379) (31,944,779)
Loss(gain) on sale of assets 14,520 (173,490)
Unrealized loss on held-for-trading 2,214,776 753,040
financial instruments
Loss from associate - 351,446
Mineral properties written off 154,065 -
Non-cash stock-based compensation
expense 9,343,055 10,411,804
Provision for site reclamation cost - 478,953
Unrealized foreign exchange (4,046,663) 5,216,445
(gain)loss
Accretion reclamation obligation 80,165 31,722
Amortization 54,152 18,768
Depletion 3,178,627 6,344,218
Interest expense accrual 120,342 1,837,874
Interest income accrual (518,807) -
Changes in non-cash operating
working capital
Amounts receivable (880,932) (713,984)
Prepaid expenses 26,523 249,427
Inventory (14,846,236) (8,046,908)
Accounts payable and accrued
liabilities 651,410 20,078,224
Cash used in operating activities (55,250,065) (76,878,538)
Investing activities
Mineral property acquisition costs (61,204) (2,690,291)
Acquisition of shares in Rand - (5)
Mutual Assurance
Proceeds on sale of assets 64,271 471,306
Additions to property, plant and (118,187,441) (34,552,892)
equipment
Transfer to other assets - (4,064,100)
Purchase of shares in Kryso - (274,798)
Resources Plc.
Reclamation deposits (1,795,074) (1,181,398)
Cash used in investing activities (119,979,448) (42,292,178)
Financing activities
Common shares and warrants issued
for cash, net of issue costs 143,403,010 6,247,772
Advances received from long-term 119,905,933 65,954,894
borrowings
Repayment of long-term borrowings (33,883,980) -
Advances to other parties - (985,000)
Advances (to)from related parties (229,680) 616,220
Cash generated from financing
activities 229,195,283 71,833,886
Increase(decrease)in cash and cash
equivalents 53,965,770 (47,336,830)
Cash and cash equivalents,
beginning of year 33,549,118 78,362,954
Foreign exchange movement on cash 1,949,474 (1,977,969)
and cash equivalents
Cash acquired through the purchase - 5,987
of Puma Gold (Pty) Ltd
Cash acquired through the purchase - 4,494,976
of Rusaf Gold Limited
Cash and cash equivalents, end of 89,464,362
year 33,549,118
CONSOLIDATED SCHEDULE OF PRE-DEVELOPMENT EXPENSES
(Expressed in Canadian Dollars)
Mineral Property Interests Year ended Year ended
December 31 December 31
2009 2008
$ $
Burnstone - Pre-development
Mine development
Establishment work - 193,475
Equipment rental and services - 892,541
Surface infrastructure - 658,127
Portal construction - 1,292,687
Underground access and - 5,558,031
infrastructure
Depreciation - 1,144,751
Other cost
Access road - 470,575
Operational costs - 4,801,643
Long hole stoping pilot project - 192,504
Waste rock dump - 27,063
Vertical shaft - 7,778,719
Energy project - 86,256
Permanent infrastructure - surface - 582,674
Pre-development expenses before the - 23,679,046
following
Office and administration - 414,214
Pre-development expenses incurred - 24,093,260
during the year
Cumulative pre-development 39,173,505 15,080,245
expenditures, beginning of year
Cumulative pre-development
expenditures, end of year 39,173,505 39,173,505
Hollister - Pre-development
Depreciation 1,731,776 1,673,964
Property evaluation 439,024 -
Surface infrastructure - 1,880,509
Underground access and 20,151,560 25,274,165
infrastructure development
Operational costs 2,487,259 9,013,695
Pre-development expenses before the 24,809,619 37,842,333
following
Office and administration 1,059,108 661,970
Pre-development expenses incurred
during the year 25,868,727 38,504,303
Cumulative pre-development 56,854,588 18,350,285
expenditures, beginning of year
Cumulative pre-development expenses,
end of year 82,723,315 56,854,588
Total pre-development expenses
before the following 24,809,619 61,521,379
Office and administration 1,059,108 1,076,184
Total pre-development expenses
incurred during the year 25,868,727 62,597,563
Cumulative pre-development
expenditures, beginning of year 96,028,093 33,430,530
Cumulative pre-development
expenditures, end of year 121,896,820 96,028,093
CONSOLIDATED SCHEDULE OF EXPLORATION EXPENSES
(Expressed in Canadian Dollars)
Mineral Property Interests Year ended Year ended
December 31 December 31
2009 2008
$ $
Burnstone - Exploration
Assays and analysis 27,504 40,817
Drilling 201,635 2,342,178
Engineering - 62,128
Equipment rental 3,470 19,461
Geological 63,757 669,751
Graphics 592 5,596
Property fees and exploration 136 7,749
option payments
Site activities 270,232 104,787
Exploration expenses before the 567,326 3,252,467
following
Office and administration - 56,895
Exploration expenses incurred
during the year 567,326 3,309,362
Cumulative exploration 31,042,717 27,733,355
expenditures, beginning of year
Cumulative exploration
expenditures, end of year 31,610,043 31,042,717
Hollister - Exploration
Assays and analysis 209,450 1,348,040
Drilling 6,886,082 8,316,210
Engineering 711,650 66,888
Environmental, socio-economic and 1,689,553 1,086,029
land
Freight 190,305 -
General office and administration 853,381 -
Geological 150,370 (19,146)
Graphics - 3,578
Property fees and exploration 73,091 133,747
option payments
Site activities 2,953,620 281,851
Exploration expenses before the 13,717,502 11,217,197
following
Office and administration - 196,221
Exploration expenses incurred 13,717,502 11,413,418
during the year
Cumulative exploration 45,195,303 33,781,885
expenditures, beginning of year
Cumulative exploration
expenditures, end of year 58,912,805 45,195,303
Rusaf Gold - Exploration
Assays and analysis 330,944 938,192
Depreciation 298,837 218,553
Drilling 11,489 2,492,273
Engineering 32,032 186,313
Equipment rental - 477,055
Freight 86,452 450,618
Geological 202,750 935,816
Graphics - 16,494
Property fees and exploration 445,495 329,373
option payments
Site activities 714,010 1,494,118
Exploration expenses incurred 2,122,009 7,538,805
during the year
Cumulative exploration 7,538,805 -
expenditures, beginning of year
Cumulative exploration 9,660,814 7,538,805
expenditures, end of year
Other - Exploration
Assays and analysis 43 284,553
Depreciation 13,817 14,459
Drilling - 6,605
Engineering - 62,721
Equipment rental 49,966 139,746
Freight 3,380 141,198
Geological 89,250 473,250
Property fees and exploration 2,272 103,863
option payments
Site activities 26,487 384,967
Transportation - 29,790
Exploration expenses incurred 185,215 1,641,152
during the year
Cumulative exploration 4,169,243 2,528,091
expenditures, beginning of year
Cumulative exploration
expenditures, end of year 4,354,458 4,169,243
Total exploration expenses before
the following 16,592,052 23,649,621
Office and administration - 253,116
Total exploration expenses
incurred during the period 16,592,052 23,902,737
Cumulative exploration
expenditures, beginning of year 87,946,068 64,043,331
Cumulative exploration
expenditures, end of year 104,538,120 87,946,068
1. NATURE OF OPERATIONS
Great Basin Gold Ltd. ("Great Basin" or "the Company") is incorporated
under the laws of the Province of British Columbia and is a pre-production
mining company engaged in the acquisition, exploration, development and
trial mining of precious metal deposits. The Company currently has two
material projects both of which are at the trial mining stage, namely (a)
the Hollister gold project, acquired in 1997, and which is located on the
Carlin Trend goldfield in Nevada, USA (the "Hollister Property") and (b)
the Burnstone gold project, acquired in 2002, and which is located in the
Witwatersrand Goldfields in South Africa (the "Burnstone Property").
The Company is also conducting early stage exploration on a number of other
prospects, primarily in Tanzania and Mozambique.
The Esmeralda property was acquired in December 2008, for US$2 million and
the assumption of the existing environmental bond, primarily for its ore
processing facility which the Company refurbished.
2. BASIS OF PREPARATION AND PRINCIPLES OF CONSOLIDATION
These consolidated financial statements ("financial statements") have been
prepared in accordance with Canadian Generally Accepted Accounting
Principles ("Canadian GAAP"), which as described in note 26 of the annual
consolidated financial statements, differ in certain respects from
accounting principles generally accepted in the United States of America.
The principal accounting policies applied in the preparation of these
financial statements are set out in the notes to the annual financial
statements. These policies have been consistently applied in all years
presented, unless otherwise stated.
These financial statements include the accounts of the Company and its
wholly-owned subsidiaries. All significant intercompany balances and
transactions have been eliminated.
3. ADOPTION OF NEW ACCOUNTING POLICIES
Effective January 1, 2009, 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) Goodwill and intangible assets (Section 3064 and 1000)
Section 3064 replaces CICA 3062 and provides guidance on the
recognition, measurement, presentation and disclosure of goodwill and
intangible assets, other than the initial recognition of goodwill or
intangible assets acquired in a business combination. The adoption of
the Section had no impact on the Company`s financial statements.
(b) Financial instruments (Section 3855)
Section 3855 was amended to change the categories into which a debt
instrument is required or permitted to be classified. The impairment
model for held-to-maturity financial assets has also been changed to
the incurred credit loss model of CICA 3025. The amendment also
requires, under specified circumstances, the reversal of previously
recognized impairment losses on available-for-sale financial assets.
These amendments apply to annual financial statements for years
beginning on/after November 1, 2008
The Section was also amended to provide guidance concerning the
assessment of embedded derivatives upon reclassification of a
financial asset out of the held-for-trading category and to clarify
the application of the effective interest method after a debt
instrument has been impaired.
The adoption of the Section had no impact on the Company`s financial
statements.
(c) Financial instrument disclosure (Section 3862)
In June 2009, the CICA amended Handbook Section 3862, Financial
Instruments - Disclosures, to enhance disclosures about fair value
measurements and the liquidity risk of financial instruments. These
amendments are intended to provide further detail on the relative
reliability of the data or inputs used to measure the fair value of
the entities` financial instruments. Specifically, financial
instruments recognized at fair value on the Consolidated Balance Sheet
must be classified in one of three fair value hierarchy levels.
The Company incorporated this amendment into its financial statements.
(d) Credit risk and the fair value of financial assets and financial
liabilities (EIC 173)
This Abstract confirms that an entity`s own credit risk and the credit
risk of the counterparty should be taken into account in determining
the fair value of financial assets and financial liabilities,
including derivative instruments, for presentation and disclosure
purposes. The adoption of this Abstract had no significant impact on
the Company`s financial statements.
(e) Mining Exploration costs (EIC 174)
This Abstract considers when exploration costs related to mining
properties may be capitalized, and if exploration costs are initially
capitalized, when mining properties should be assessed for impairment
to determine whether a write-down is required, and what conditions
indicate impairment. The Abstract is effective for financial
statements issued after March 27, 2009. The adoption of this Abstract
had no significant impact on the Company`s financial statements.
4. SEGMENT DISCLOSURE
The Company operates in a single reportable operating segment, the
exploration and development of mineral properties. Geographic information
is as follows:
Assets December 31 December31
2009 2008
Canada
Assets other than mineral property
interests 76,835,615 22,610,226
Mineral property interests 1 1
Tanzania
Assets other than mineral property
interests 729,390 1,551,261
Mineral property interests 36,466,782 36,466,782
United States
Assets other than mineral property
interests 28,343,641 10,844,303
Mine development and equipment 37,660,434 16,698,084
Mineral property interests 79,135,622 92,505,493
South Africa
Assets other than mineral property
interests 28,475,637 22,281,236
Mine development and equipment 153,320,460 31,356,717
Mineral property interests 107,316,284 130,886,380
Total assets 365,200,482
548,283,866
Revenue December 31 December 31
2009 2008
United States
Ore sales 33,737,518 24,716,323
During 2009 the Company generated revenue of $33.7 million (US$28 million)
(2008: $24.7 million (US$23 million)) from its Hollister operation. The ore
was sold under the terms of various toll milling and ore purchase
agreements to Newmont Mining Corporation and Echo Bay Minerals Company
("Kinross") (2008: Newmont Mining Corporation).
5. SUBSEQUENT EVENTS
Subsequent to December 31, 2009
(a) Shares issuance, January 27, 2010
Pursuant to the Rusaf agreement of April 1, 2008, the Company issued
3,073,773 shares, as additional consideration, valued at $5.6 million
on January 27, 2010 upon gold discoveries above a threshold of 500,000
ounces in size, on mineral prospects held by Rusaf.
(b) Share options granted, February 9, 2010
The Company granted 950,000 options on February 9, 2010 with an
exercise price of $1.78 per common share and an expiry date of
February 10, 2013.
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
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.greatbasingold.com
23 March 2010
Johannesburg
Sponsor
Nedbank Capital
Date: 23/03/2010 14:30:01 Produced by the JSE SENS Department.
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