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GBG
GBG
GBG - Great Basin Gold Limited - Unaudited interim consolidated financial
statements for the quarter and nine months ended September 30, 2010
GREAT BASIN GOLD LIMITED
(Incorporated in Canada and registered as an External Company in South Africa)
(Registration No. 2006/021304/10)
Share Code: GBG ISIN Number: CA3901241057
("Great Basin" or "the Company")
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER AND NINE
MONTHS ENDED SEPTEMBER 30, 2010
CONSOLIDATED BALANCE SHEETS
(Expressed in Canadian Dollars)
September December
30 31
2010 2009
$`000 $`000
Assets
Current assets
Cash and cash equivalents 23,089 89,464
Amounts receivable 10,446 5,053
Inventory 24,640 26,312
Other assets 1,927 6,033
60,102 126,862
Property, plant and equipment 418,430 191,474
Reclamation deposits 4,632 4,590
Restricted cash 11,950 2,439
Mineral property interests 246,798 222,919
TOTAL ASSETS 741,912 548,284
Liabilities and Shareholders` Equity
Current liabilities
Accounts payable and accrued liabilities 77,996 29,206
Current portion of long term borrowings 9,239 43,768
Current portion of other liabilities 117 -
87,352 72,974
Long-term borrowings 203,383 86,948
Future income taxes 18,939 10,659
Other liabilities 9,653 -
Site reclamation obligations 4,110 3,990
236,085 101,597
Shareholders` equity
Share capital 627,766 567,596
Warrants 11,328 13,104
Contributed surplus 87,464 83,267
Deficit (301,346) (265,713)
Accumulated other comprehensive loss (6,737) (24,541)
418,475 373,713
TOTAL LIABILITIES AND SHAREHOLDERS` EQUITY 741,912 548,284
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the three months ended September 30, 2010 and September 30, 2009
(Expressed in Canadian Dollars)
Three months ended September
30
2010 2009
$`000 $`000
Revenue 12,230 -
(Expenses) income
Production cost (15,540) -
Depletion charge (1,455) -
Exploration expenses (3,161) (3,532)
Pre-development expenses (3,653) (8,443)
Corporate and administrative cost (2,151) (2,115)
Environmental impact study (763) (191)
Foreign exchange gain 921 1,449
Salaries and compensation
Salaries and wages (2,146) (2,034)
Stock-based compensation (1,123) (437)
Loss before the undernoted and income (16,841) (15,303)
taxes
Interest expense (15) (28)
Interest income 327 541
Net unrealized profit (loss) on held- 77 (2,224)
for trading financial instruments
Net unrealized loss on held-for (3,606) -
trading financial instruments
recognized
Net unrealized market-to-market (3,699) -
adjustments on held-for-trading
financial instruments
Loss before income taxes (23,757) (17,014)
Taxes 36 (381)
Future income tax recovery - 1,013
Loss for the period (23,721) (16,382)
Other comprehensive income (loss)
Unrealized gain on available-for-sale - 633
financial instruments
Unrealized gain (loss) on foreign
exchange translation of self-
sustaining foreign operations 21,277 (5,966)
Other comprehensive income (loss) 21,277 (5,333)
(2,444) (21,715)
Total comprehensive loss for the
period
Basic and diluted loss per share (0.05)
(0.07)
Weighted average number of common 351,739
shares outstanding (thousands) 333,531
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the nine months ended September 30, 2010 and September 30, 2009
(Expressed in Canadian Dollars)
Nine months ended September 30
2010 2009
$`000 $`000
Revenue 56,992 33,738
(Expenses) income
Production cost (46,033) (19,391)
Depletion charge (5,549) (3,179)
Exploration expenses (8,076) (11,899)
Pre-development expenses (10,338) (22,139)
Corporate and administrative (5,521) (6,312)
cost
Corporate social responsibility - (1,111)
Environmental impact study (2,002) (551)
Foreign exchange gain(loss) (450) 1,810
Salaries and compensation
Salaries and wages (5,333) (4,952)
Stock-based compensation (3,831) (7,338)
Loss before the undernoted and (30,141) (41,324)
income taxes
Interest expense (53) (146)
Interest income 1,378 2,475
Net realized profit on 489 -
available-for-sale financial
instruments
Net realized loss on held-for- (67) -
trading financial instruments
Net unrealized profit (loss) on 43 (2,062)
held-for-trading financial
instruments
Net unrealized loss on held-for- (3,606) -
trading financial instruments
recognized
Net unrealized market-to-market (3,699) -
adjustments on held-for-trading
financial instruments
Loss before income taxes (35,656) (41,057)
Taxes 23 (749)
Future income tax recovery - 1,725
Loss for the period (35,633) (40,081)
Other comprehensive income
(loss)
Unrealized gain on available- 603 1,362
for-sale financial instruments
Realized gain on available-for- (1,530) -
sale financial instruments upon
disposal
Unrealized gain on foreign 18,731 5,225
exchange translation of self-
sustaining foreign operations
Other comprehensive (loss) (17,804) 6,587
income
(17,829) (33,494)
Total comprehensive loss for
the period
Basic and diluted loss per (0.10) (0.13)
share
Weighted average number of 343,135 302,052
common shares outstanding
CONSOLIDATED STATEMENTS OF SHAREHOLDERS`EQUITY AND DEFICIT
(Expressed in Canadian Dollars)
Nine months ended Nine months ended
September 30, 2010 September 30, 2009
$`000 $`000
Common shares Shares Shares
(thousands) (thousands)
Balance at beginning 567,596 428,657
of the period 334,158 215,167
Equity line: shares - 3,911
issued for cash, net
of share issue costs - 2,847
Public offering: - 132,700
shares issued for
cash, net of share - 115,000
issue costs
Share purchase options 4,462 1,314
exercised 2,058 654
Share purchase 32,555 -
warrants exercised 19,237 -
Shares issued for 3,910 -
early settlement of
Senior Secured Notes 2,234 -
Shares issued on 19,243 -
settlement of Rusaf
contingent payment
requirement 10,574 -
Shares issued for - 35
mineral properties - 20
Balance at end of the 627,766 566,617
period 368,261 333,688
Share purchase Warrants
warrants Warrants (thousands)
(thousands)
Balance at beginning 13,104 24,006
of the period 86,178 49,180
Warrants issued - -
pursuant to Senior - 8,248
Secured Notes
Warrants issued - 5,308
pursuant to public
offering, net of share - 57,500
issue costs
Exercised, credited to (1,776) -
share capital (19,237) -
Expired - - (28,750) (16,210)
Balance at end of the
period 66,941 11,328 86,178 13,104
Contributed surplus
Balance at beginning 83,266 21,600
of the period
Stock-based 5,696 10,477
compensation
Share purchase options (1,498) (464)
exercised, credited to
share capital
Fair value of share - 16,210
purchase warrants
expired
Balance at end of the 87,464 47,823
period
Deficit
Balance at beginning (265,713) (217,267)
of the period
Nett loss for the (35,633) (40,081)
period
Balance at end of the (301,346) (257,348)
period
Accumulated other
comprehensive
(loss)income
Balance at beginning (24,541) 213
of the period
Unrealized gain on 603 1,362
available-for-
sale financial
instruments
Realized gain on (1,530) -
available-for-sale
financial instruments
upon disposal
Accumulated unrealized 18,731 5,225
gain on foreign
exchange translation
of self-sustaining
foreign operations
Balance at end of the (6,737) 6,800
period
Total Accumulated (308,083) (250,548)
comprehensive loss and
deficit at end of the
period
TOTAL SHAREHOLDERS`
EQUITY
418,475 376,996
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended September 30, 2010 and September 30, 2009
(Expressed in Canadian Dollars)
Three months ended September
30
2010 2009
$`000 $`000
Operating activities
Loss for the period (23,721) (16,382)
Items not involving cash
Production non-cash charges 744 101
Pre-development non-cash charges 265 1,348
Exploration non-cash charges 87 79
Depreciation 57 146
Future income tax recovery - (1,013)
Net realized profit on available- - -
for-sale financial instruments
Net realized loss on held-for-
trading financial instruments - -
Unrealized (gain)loss on held- (77) 2,224
for-trading financial
instruments
Unrealized loss on held-for- 3,606 -
trading financial instruments
recognized
Unrealized mark-to-market 3,699 -
adjustments on held-for-trading
financial instruments
Mineral properties written off - -
Non-cash stock-based 1,123
compensation expense 438
Unrealized foreign exchange gain (936) (3,199)
Depletion 1,455 -
Interest expense accrual 138 141
Interest income accrual (173) -
Changes in non-cash operating
working capital
Amounts receivable 11,148 4,308
Prepaid expenses (489) (170)
Inventory 589 (5,828)
Accounts payable and accrued 3,105 (1,523)
liabilities
Cash generated from (used in) 620 (19,330)
operating activities
Investing activities
Mineral property acquisition - (61)
costs
Net proceeds on sale of - -
financial instruments
Proceeds on sale of assets - 62
Additions to property, plant and (69,978) (31,612)
equipment
Additions to restricted cash - -
Reclamation deposits (150) 43
Cash used in investing (70,128) (31,568)
activities
Financing activities
Common shares and warrants 30,023 334
issued for cash, net of issue
costs
Net proceeds received from long- 24,553 -
term borrowings
Repayment of long term (621) (382)
borrowings
Payment of interest on - -
convertible debentures
Early settlement of 6,925 senior - -
secured notes
Advances from related parties - 8
Cash generated from (used in) 53,955 (40)
financing activities
Decrease in cash and cash (15,553) (50,938)
equivalents
Cash and cash equivalents, 39,556 110,176
beginning of period
Foreign exchange movement on (914) (3,300)
cash and cash equivalents
Cash and cash equivalents, end 23,089 55,938
of period
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2010 and September 30, 2009
(Expressed in Canadian Dollars)
Nine months ended September
30
2010 2009
$`000 $`000
Operating activities
Loss for the period (35,633) (40,081)
Items not involving cash
Production non-cash charges 2,356 689
Pre-development non-cash charges 788 2,137
Exploration non-cash charges 223 239
Depreciation 158 220
Future income tax recovery - (1,725)
Net realized profit on available- (489) -
for-sale financial instruments
Net realized loss on held-for- 67 -
trading financial instruments
Unrealized (gain)loss on held- for- (43) 2,062
trading on financial instruments
Unrealized loss on held- for- 3,606 -
trading on financial instruments
recognized
Unrealized mark-to-market 3,699 -
adjustments on held-for-trading
financial instruments
Mineral properties written off - 154
Non-cash stock-based compensation
expense 3,831 7,338
Unrealized foreign exchange gain (1,489) (1,927)
Depletion 5,549 3,179
Interest expense accrual 302 375
Interest income accrual (318) (56)
Changes in non-cash operating
working capital
Amounts receivable (3,037) 2,640
Prepaid expenses (1,070) (167)
Inventory 2,571 (3,882)
Accounts payable and accrued
liabilities 7,574 (932)
Cash used in operating activities (11,355) (29,737)
Investing activities
Mineral property acquisition costs (51) (61)
Net proceeds on sale of financial 3,527 -
instruments
Proceeds on sale of assets - 62
Additions to property, plant and (145,988) (87,782)
equipment
Additions to restricted cash (5,882) -
Reclamation deposits (52) (1,554)
Cash used in investing activities (148,446) (89,335)
Financing activities
Common shares and warrants issued 31,377
for cash, net of issue costs 142,770
Net proceeds received from long- 72,401 -
term borrowings
Repayment of long term borrowings (1,283) (781)
Payment of interest on convertible (5,453) -
debentures
Early settlement of 6,925 senior (4,569) -
secured notes
Advances to related parties - (230)
Cash generated from financing 92,473 141,759
activities
(Decrease)increase in cash and cash 22,687
equivalents (67,328)
Cash and equivalents, beginning of 89,464 33,549
the period
Foreign exchange movement on cash 953 (298)
and cash equivalents
Cash and equivalents, end of the 23,089 55,938
period
CONSOLIDATED SCHEDULE OF EXPLORATION EXPENSES
(Expressed in Canadian Dollars)
Mineral Property Interests Nine months Year ended
ended September December 31
30
2010 2009
$`000 $`000
Burnstone - Exploration
Assays and analysis - 28
Drilling 17 202
Equipment rental - 3
Geological 64 64
Graphics - 1
Property fees and exploration option 12 -
payments
Site activities 252 269
Exploration expenses incurred during 345 567
the period
Cumulative exploration expenditures, 31,610 31,043
beginning of period
Cumulative exploration expenditures, 31,955 31,610
end of period
Hollister - Exploration
Assays and analysis 129 209
Drilling 2,984 6,886
Engineering - 712
Environmental, socio-economic and 69 1,690
land
Freight 47 190
General office and administration 1,324 853
Geological 148 150
Property fees and exploration option 108 73
payments
Site activities 1,609 2,955
Exploration expenses incurred during 6,419 13,718
the period
Cumulative exploration expenditures, 58,913 45,195
beginning of period
Cumulative exploration expenditures, 65,332 58,913
end of period
Rusaf Gold - Exploration
Assays and analysis 28 331
Depreciation 223 299
Drilling - 11
Engineering 5 32
Freight 10 86
Geological 72 203
Property fees and exploration option 383 445
payments
Site activities 590 715
Exploration expenses incurred during 1,311 2,122
the period
Cumulative exploration expenditures, 9,661 7,539
beginning of period
Cumulative exploration expenditures, 10,972 9,661
end of period
Other - Exploration
Depreciation - 14
Equipment rental - 50
Freight - 3
Geological - 89
Property fees and exploration option - 2
payments
Site activities and closure 1 27
Exploration expenses incurred during 1 185
the period
Cumulative exploration expenditures, 4,354 4,169
beginning of the period
Cumulative exploration expenditures, 4,355 4,354
end of period
Total exploration expenses incurred 8,076 16,592
during the period
Cumulative exploration expenditures, 104,538 87,946
beginning of period
Cumulative exploration expenditures, 112,614 104,538
end of period
CONSOLIDATED SCHEDULE OF PRE-DEVELOPMENT EXPENSES
(Expressed in Canadian Dollars)
Mineral Property Interests Nine months Year ended
ended September December 31
30
2010 2009
$`000 $`000
Burnstone - Pre-development
Cumulative pre-development 39,174 39,174
expenditures, beginning of period
Cumulative pre-development 39,174 39,174
expenditures, end of period
Hollister - Pre-development
Depreciation 540 1,732
Property evaluation - 439
Underground access and 8,560 20,152
infrastructure development
Operational costs 990 2,487
Pre-development expenses before the 10,090 24,810
following
Office and administration 248 1,059
Pre-development expenses incurred 10,338 25,869
during the period
Cumulative pre-development 82,723 56,854
expenditures, beginning of period
Cumulative pre-development expenses, 93,061 82,723
end of period
Total pre-development before the 10,090 24,810
following
Office and administration 248 1,059
Total pre-development expenses 10,338 25,869
incurred during the period
Cumulative pre-development 121,897 96,028
expenditures, beginning of period
Cumulative pre-development 132,235 121,897
expenditures, end of period
1. NATURE OF OPERATIONS
These unaudited interim consolidated financial statements have been
prepared in accordance with Canadian Generally Accepted Accounting
Principles ("GAAP"). They do not include all the financial statement
disclosures required for annual financial statements under GAAP. These
unaudited 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 three and nine month periods ended September
30, 2010 are not necessarily indicative of the results that may be
expected for the full fiscal year ending December 31, 2010. In the
opinion of management, these unaudited interim consolidated financial
statements reflect all adjustments that are necessary for a fair
presentation of the results for the interim periods presented.
2. SIGNIFICANT ACCOUNTING POLICIES
These unaudited interim consolidated financial statements follow the same
accounting policies and methods of application as the Company`s most
recent annual financial statements, except as described in note 3.
3. ADOPTION OF NEW ACCOUNTING POLICIES
Effective January 1, 2010, the Company adopted the following accounting
standards issued by the Canadian Institute of Chartered Accountants
("CICA"). These new standards have been adopted with no restatement of
prior period financial statements.
CICA 1506 - Accounting changes
This Section shall be applied in accounting for changes in accounting
policies, changes in accounting estimates and corrections of prior period
errors. CICA 1506 is amended to exclude from its scope changes in
accounting policies upon the complete replacement of an entity`s primary
basis of accounting. The amendments apply to interim and annual financial
statements for years beginning on/after July 1, 2009. The adoption of
this Section had no impact of the Company`s consolidated financial
results.
International Financial Reporting Standards
Canadian public companies will be required to prepare financial
statements in accordance with International Financial Reporting Standards
("IFRS"), as issued by International Accounting Standards Board, for
financial years beginning on or after January 1, 2011. Effective January
1, 2011, the Company will adopt IFRS as the basis for preparing its
consolidated financial statements. The Company will issue its financial
results for quarter ended March 31, 2011 prepared on an IFRS basis and
will provide comparative data on an IFRS basis required.
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 September December 31
30 2009
2010
$`000 $,000
Canada
Assets other than mineral property
interests 19,954 76,836
Tanzania
Assets other than mineral property
interests 564 729
Mineral property interests 64,066 36,467
United States
Assets other than mineral property
interests 27,457 28,344
Mine development and equipment 40,904 37,660
Mineral property interests 71,360 79,136
South Africa
Assets other than mineral property
interests 28,996 28,476
Mine development and equipment 377,238 153,320
Mineral property interests 111,373 107,316
Total assets 548,284
741,912
Three months Nine months ended
ended
Revenue September 30 September 30
2010 2009 2010 2009
$`000 $`000 $`000 $`000
United States
Ore sales 12,230 - 56,992 33,738
During the three and nine months ended September 30, 2010 the Company
generated net revenue from its Hollister operation.
Refined gold and silver were sold to Red Kite Explorer Trust under the
terms of an off-take agreement, whilst unprocessed ore was sold under the
terms of ore purchase agreements to Newmont Mining Corporation and
Queenstake Resources (2009: Various toll milling and ore purchase
agreements to Newmont Mining Corporation and Echo Bay Minerals Company
("Kinross")).
5. SUBSEQUENT EVENTS
(a) Restructure Senior secured notes
During October 2010, the Company successfully negotiated the cancellation
of the put option on 12,000 Senior Secured Notes (the "Notes"). The
cancellation of the put option removes the potential repayment of the
12,000 Notes by December 2010 and provides the Company with the
flexibility to settle the Notes any time on or before December 12, 2011.
(b) Advancement of loan to Tranter Burnstone (Pty) Ltd
The Company advanced a loan of $13 million (ZAR88 million) under the
guarantee agreement to Tranter Burnstone on October 1, 2010 to enable
Tranter Burnstone to meet its obligations under their loan agreement with
Investec. The balance of the restricted cash was used to partially
fulfill this obligation.
(c) Warrants exercised
An additional 38.2 million of the 2009 Public Offering warrants were
exercised up to October 15, 2010 with the equivalent number of ordinary
shares issued. The remaining 72,144 warrants expired unexercised.
(d) Warrants expired
In terms of the October 2007 BEE transaction, the Company issued a total
of 1.7 million warrants at an exercise price of ZAR20.78. These warrants
expired unexercised on October 1, 2010.
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 Georgia
Sandown, Johannesburg 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
16 November 2010
Johannesburg
Sponsor
Nedbank Capital
Date: 16/11/2010 15:00:01 Produced by the JSE SENS Department.
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