| Mon 28 Feb 2011, 7:05 | | GDO - Gold One International Limited - Audited abridged consolidated financial |
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GDO
GDO
GDO - Gold One International Limited - Audited abridged consolidated financial
report for the year ended 31 December 2010
Gold One International 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" or the "group")
AUDITED ABRIDGED CONSOLIDATED FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER
2010
2010 HIGHLIGHTS:
- Profit before taxation of U$ 17.74 million (A$ 19.35 million)
- Cash generated from operations of U$ 32.85 million (A$ 35.83 million)
- Capital expenditure of U$ 31.46 million (A$ 34.31 million) (equates to
US$ 474 per ounce)
- 2011 earnings guidance of US$ 59 million
CHIEF EXECUTIVE OFFICER`S REPORT
I am pleased to report back on the first full year of commercial production
and milestones attained during 2010 for Gold One and its subsidiaries.
I would categorise the year under review into two halves. The first half saw
us manage a five-week long wage strike, which hampered the production ramp up
that we had planned at our flagship Modder East mine. The second half saw a
significant increase in gold output at Modder East, which, when combined with
our low cash costs, resulted in the company showing an operating profit of A$
24.95 million for the year and a maiden net profit before tax of A$ 19.35
million. This achievement is all the more pleasing considering that it was
Modder East`s first full year of commercial production. The company also
managed to significantly increase its reserve and resource portfolio; the
lifeline of any mining company. The new 1.53 million ounce reserve inventory
at Modder East also resulted in the minelife extending by 5 years to a total
of 13 years (please refer to detailed resource and reserve table on page 12 of
the full annual report available on www.gold1.co.za).
The pre-tax profit before finance costs of A$ 24.948 million was affected by
certain once-off transactions or non-recurring events. These include a
positive fair value adjustment on convertible bonds of A$ 9.259 million, costs
incurred on the Goliath Gold transaction of A$ 1.253 million and the
refinancing of bonds amounting to A$ 5.146 million. If these once-off
transactions or non-recurring events were excluded from the financial results,
the pre-tax profit before finance costs would have been A$ 22.088 million.
The aforementioned five-week wage strike led to maturation in both employee
and union relations, despite the negative impact on production. Management
ensured that employees were not marginalised during the strike and I am
pleased to report that we have continued to have excellent employee relations
at our operations. The strike also did not result in management changing its
final offer, which resulted in Gold One earning the respect of the South
African National Union of Mineworkers ("NUM").
I am thus pleased to report that, for 2010, Gold One produced 66,445 ounces of
gold at an average cash cost, at Modder East, of US$ 484/oz. This was achieved
despite the South African rand ("ZAR") (the company`s functional currency)
appreciating strongly against the US dollar, averaging at ZAR 7.34 / US$ 1 for
the year.
For 2011, production ramp up will continue and, in line with increasing
volume, unit costs will fall. Gold One is targeting 120,000 ounces of
production at US$ 417/oz cash costs for the 2011 financial year. Capital
expenditure is expected to be US$ 42 million, including US$ 21 million of
development capital. Total costs are budgeted at US$ 614/oz. Refer to page 9
of the full annual report available on www.gold1.co.za for the definitions of
cash costs and total costs.
I am very pleased with the company`s safety performance, which resulted in a
lost-time injury frequency rate per 200,000 hours ("LTIFR") of only 0.48,
which is better than the Australian industry benchmark LTIFR of one for
underground mines. Our motto, "nothing is so important that it cannot be done
safely", is referenced wherever possible and forms part of Gold One`s daily
routine at the company`s respective operations. The company is also in the
process of ensuring that Modder East is ISO 14001 compliant and certification
will take place in the first half of 2012. Competency and training are
fundamental to good performance and, in this regard, the Sub Nigel training
centre has proven to be a perfect addition to Modder East. The training centre
provides the ideal environment for mining teams to receive the necessary
training and practical knowledge to ensure they are competent when transferred
to Modder East.
A further significant highlight for the year was the advancement we made in
increasing Gold One`s total resource. Following resource upgrades for the
Modder East, Ventersburg and Megamine projects, the company`s total resource
increased to 21.71 million ounces of gold. This comprises 8.60 million ounces
in the measured and indicated resource category (88.09 million tonnes at 3.03
grams per tonne) and 13.11 million ounces in the inferred category (103.06
million tonnes at 3.95 grams per tonne).
Through the sale of our deeper Megamine assets to White Water Resources
Limited ("White Water Resources") in exchange for White Water Resources
shares, Gold One has been able to retain exposure to these quality deeper
level Megamine assets. On implementation of the transaction, Gold One will
hold 71% of White Water Resources, which will be renamed Goliath Gold Mining
Limited ("Goliath Gold"). The transaction is subject to certain conditions
including White Water Resources shareholder approval. Goliath Gold will focus
on the development of the Megamine assets, allowing Gold One to focus on its
stated strategy of developing shallow, low technical risk projects such as
Ventersburg.
The independent concept study completed on Ventersburg early in 2010
identified that, for a successful outcome of the pre-feasibility study,
Ventersburg required an indicated resource of at least 2 million ounces. I am
pleased to advise that this was successfully accomplished through further
exploration drilling during 2010. Ventersburg`s 2.45 million ounce indicated
resource will strongly underpin the project`s pre-feasibility study, which is
due to be completed during the first quarter of 2011.
And finally, the major overhang and biggest uncertainty facing Gold One in
2010 was the refinancing of the company`s US$ 62 million convertible bonds due
in 2012. Over the course of 2010, the company had been negotiating with two
banks to put in place a facility that would cover the potential liability that
the company`s convertible bondholders presented in the form of the
bondholders` December 2010 once-off put option. This once-off put would have
allowed bondholders to request US$ 62 million of cash back in return for their
bonds and could have had a considerable negative impact on the company. While
Gold One did manage to secure an approved credit facility in October 2010 to
cover the whole put, the bondholders decided in November 2010 that they would
not put their bonds. This reflected the bondholders` clear recognition of the
underlying value of the Gold One equity as well as of the solid fundamentals
of the company.
OUTLOOK
The year 2011 is set to be all about growth. Having focused on creating a
sustainable and strong production platform at Modder East during 2010, and
increasing both the size and quality of our resources, the company is well
positioned for both production and organic growth in 2011. The company has
also increased its management capacity, aimed at better evaluating external
opportunities in gold as well as in other precious metals.
It was a further milestone to provide our first earnings guidance of US$ 59
million for the 2011 financial year in late 2010. I believe that the
foundations established during 2010 have successfully positioned the company
to achieve this, based on our expectations for 2011.
Neal Froneman
Chief Executive Officer and President
28 February 2011
DIRECTORS
The directors of Gold One during the whole of the financial year and up to the
date of the annual report are as follows:
Date of
Director appointment Nationality Independence
Mark K Wheatley 10 July 2006 Australian Independent
Neal J Froneman 14 April 2009 South African Executive
Christopher D Chadwick 25 May 2009 South African Executive
Barry E Davison 25 May 2009 South African Independent
Kenneth V Dicks 25 May 2009 South African Independent
William B Harris 25 May 2009 American Independent
Sandile Swana 25 May 2009 South African Not independent
Kenneth J Winters 2 August 2005 Australian Independent
For the full directors` report please see pages 22 to 39 of the annual report
available on www.gold1.co.za
PRINCIPLE ACTIVITIES AND NATURE OF OPERATIONS
Gold One is an Australian and African gold miner with a primary listing on the
ASX and a secondary listing on the JSE (issuer code "GDO"). Gold One`s ADRs
are also traded in the United States, in the over the counter market, under
the ticker "GLDZY", where each ADR represents 10 ordinary shares.
The financial statements reflect the progress of Gold One since declaring
commercial production at the Modder East mine and its pursuit of both internal
growth through existing exploration projects and external growth through
corporate activity. The operating results and state of affairs of the group
are fully set out in the financial report and are characterised by gold sales,
related production costs, interest paid on the convertible bonds, and the non-
cash adjustment for the fair value revaluation of the convertible bonds.
The financial report covers the financial statements for the consolidated
entity consisting of Gold One and its subsidiaries. The financial report is
presented in Australian Dollars.
The full annual report has been released on the ASX Company Announcements
platform (www.asx.com.au) and is also available on the company`s website
hosted at www.gold1.co.za. The annual report is expected to be posted to
shareholders who have requested that hard copies be posted to them, on or
about 28 February 2011.
COMPANY REVIEW
Gold One is an ASX and JSE listed gold producer focused on developing and
mining low technical risk, high margin precious metal resources in mining
friendly jurisdictions. Gold One was created on 18 May 2009 via the inward
listing of Gold One - formerly BMA Gold - on the JSE and the subsequent
acquisition by Gold One of all the issued ordinary shares in Aflease Gold by
way of a scheme of arrangement.
Key Company data
Exchange listings Primary ASX listing and secondary JSE listing
Issuer code GDO
Shares in issue 807.08 million as at 25 February 2011
Share price A$ 0.345 as at 25 February 2011
Market cap (Undiluted) A$ 278 million
Options in issue* 88.6 million
Cash and gold receivables A$ 11.353 million
Convertible bonds** US$ 62.9 million as at 13 December 2010
Bank debt / Hedging Nil
* Includes 6,561,956 listed 2012 options at a strike price A$ 0.50.
** Unless previously redeemed or converted, the 501 bonds will be redeemed on
13 December 2012 at US$ 130,760.91 per bond. The bonds can be converted at any
time up to maturity into ordinary shares. The current conversion price is US$
0.38 per share.
In December 2009, Gold One transitioned from a gold explorer and developer to
a gold producer with the declaration of commercial production at the company`s
flagship Modder East mine. The company`s status on the ASX was amended in June
2010 from a mining exploration company to a mining production company. During
2010, a total of 66,445 ounces of gold was produced, primarily from Modder
East. Gold One also operates a training centre from the nearby Sub Nigel mine,
where personnel and mining teams are trained underground before being
recruited for Modder East. In 2010 the training centre contributed a total of
3,980 ounces of gold to the total annual production.
2010 Performance
2010 2009
Annual gold production 66,445 ounces 17,040 ounces
Annual Lost-Time Injury
Frequency Rate (per 200 000
hours) 0.48 LTIFR 1.14 LTIFR
Annual exploration expenditure
A$4.113 million A$3.885 million
Annual external capital raised
Nil A$37.5 million
Average realised gold price
per ounce US$1,252 per ounce US$1,033 per ounce
Net profit / (loss) after tax
A$ 14.593 million A$ (26.070) million
Cash generated from / (used
by) operations A$ 35.834 million A$ (12.224) million
Group free cash flow* A$ 2.766 million A$ (63.051) million
Modder East cash cost** US$ 484 per ounce US$ 593 per ounce
Modder East total cost*** US$ 686 per ounce US$ 686 per ounce
* Group free cash flow refers to cash available from group operations before
interest charges and taxation.
** Cash cost refers to all costs directly associated with mining activities,
mine administration, processing and refining.
*** Total cost refers to the sum of cash costs, depreciation and royalties.
Capital expenditure, finance costs and corporate costs are excluded from total
cost.
2010 Highlights
5 February Primary JSE listing is amended to a secondary listing
8 March Gold One is added to the ASX All Ordinary Index
22 April Three-year wage agreement concluded with the South African
National Union of Mineworkers, marking the end of the five-
week strike
13 May Modder East pours its first tonne of gold
18 May Modder East is officially opened
7 October Credit approval received for a US$ 65 million loan facility
to finance the company`s convertible bondholders` December
2010 once-off put option
11 October Megamine resource increased by 115% to 86.17 million tonnes
at 4.57 grams per tonne for 12.65 million ounces of gold*
13 October Planned formation of Goliath Gold is announced - a vehicle
to develop Gold One`s medium-depth assets, to be formed out
of Gold One`s reverse takeover of investment holding
company White Water Resources
15 November Convertible bondholders confirm that none plan to exercise
their December 2012 once-off put option
7 December Ventersburg indicated resource increased by 70% to 20.42
million tonnes at 3.70 grams per tonne for 2.45 million
ounces of gold**
15 December Modder East resources and reserves increased by 18% and 13%
respectively, extending Modder East life of mine by five
years to 2022***
* Refer to detailed resource table on page 17 of the annual report available
on www.gold1.co.za
** Refer to detailed resource table on page 18 of the annual report available
on www.gold1.co.za
*** Refer to detailed resource and reserve tables on pages 13 and 14 of the
annual report available on www.gold1.co.za
For the full company review please see pages 8 to 21 of the annual report
available on www.gold1.co.za
AUDITOR`S REPORT
The consolidated audited financial statements for the period ended 31 December
2010 contained in the financial report have been audited by
PricewaterhouseCoopers. The auditor`s unqualified audit report is available
for inspection at the company`s registered and representative offices.
The financial report has been prepared in accordance with the Corporations Act
2001 and is in compliance with the Australian Accounting Standards (including
the Australian Accounting Interpretations) and the Corporations Regulations
2001, and with International Financial Reporting Standards.
THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2010
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER
2010
Note Group Group
2010 2009
A$`000 A$`000
Revenue from gold sales 89,329 7,041
Cost of sales 5 (53,232) (3,284)
Gross profit 36,094 3,757
Other income 431 22
General and administrative expenditure 6 (15,098) (17,574)
Fair value adjustment on financial liability 20 9,259 411
Other expenses 7 (1,729) (7,396)
Exploration and pre-feasibility expenditure (4,009) (3,885)
Operating profit/ (loss) before finance costs 24,948 (24,665)
Finance income 558 1,822
Finance costs 8 (6,158) (7,958)
0
Profit/ (Loss) before taxation 19,348 (30,801)
Income tax 9 (4,755) 4,731
Profit/ (Loss) for the year 14,593 (26,070)
Other comprehensive income, net of tax:
(loss)/income:
Currency translation differences on foreign
operations 10 (1,600) (6,993)
Total comprehensive income/(loss) for the 12,993 (33,063)
year
Profit/ (Loss) for the year attributable to:
Owners of the Parent 14,593 (26,070)
Total comprehensive income/(loss)
attributable to:
Owners of the Parent 12,993 (33,063)
Earnings/(loss)per share:
Basic and diluted earnings/ (loss) per share 25 0.02 (0.04)
(A$)
Headline earnings / loss for the period is the profit and / or loss per period
adjusted for profits and / or losses attributable to once-off expenses and
capital gains or losses. The disclosure of headline earnings / loss per share
is a requirement of the JSE.
Group Group
2010 2009
Headline earnings/ (loss) per share (A$) 0.02 (0.03)
Calculated based on:
Weighted average number of fully paid ordinary 806,875,987 645,254,632
shares
Headline earnings/ (loss) for the period (A$ 14,740 (21,089)
`000)
Reconciliation of basic and headline earnings/
(loss) for the period (A$ `000)
Profit/ (Loss) for the period (A$ `000) 14,593 (26,070)
Impairment of assets 148 5,226
Gain on sale of assets (1) (245)
Headline loss for the year 14,740 (21,089)
The above consolidated statement of comprehensive income should be read in
conjunction with the accompanying notes set out in the annual report available
on www.gold1.co.za
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2010
Note Group Group
31 Dec 31 Dec
2010 2009
A$`000 A$`000
ASSETS
Current assets
Cash and cash equivalents 11 4,501 11,259
Trade and other receivables 12 9,470 10,982
Inventories 13 2,313 2,244
Taxation receivable 286 -
16,570 24,485
Non-current assets
Receivables 14 18 18
Held-to-maturity investments 15 1,518 1,293
Property, plant and equipment 16 160,173 142,323
Deferred tax assets 17 4,802 -
166,511 143,634
Total assets 183,081 168,119
LIABILITIES
Current liabilities
Trade payables 18 12,181 10,340
Accruals 19 2,031 1,597
Financial liabilities designated at fair value 20 - 80,293
14,212 92,230
Non-current liabilities
Financial liabilities designated at fair value 20 66,593 -
Deferred tax liability 17 9,553 -
Provisions 21 3,268 3,021
79,414 3,021
Total liabilities 93,626 95,251
NET ASSETS 89,455 72,868
EQUITY
Contributed Equity 22 130,782 130,215
Reserves 23 (2,301) (3,728)
Accumulated loss 23 (39,026) (53,619)
Capital and reserves attributable to owners of
Gold One 89,455 72,868
The above consolidated statement of financial position should be read in
conjunction with the accompanying notes set out in the annual report available
on www.gold1.co.za
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER
2010
Contributed Reserves Accumulated Total
Equity Loss Equity
A$`000 A$`000 A$`000 A$`000
Balance at 01 January 2009 66,179 (188) (27,549) 38,442
Total comprehensive loss for
the year - (6,993) (26,070) (33,063)
Transactions with owners in
their capacity as owners
Contributions of equity net
of transaction costs 56,667 - - 56,667
Shares issued on acquisition 7,355 - - 7,355
Employee share options 14 3,453 - 3,467
Total changes 64,036 (3,540) (26,070) 34,426
Balance at 31 December 2009 130,215 (3,728) (53,619) 72,868
Total comprehensive income
for the year - (1,600) 14,593 12,993
Transactions with owners in
their capacity as owners
Contributions of equity net
of transaction costs 148 - - 148
Employee share options 419 3,027 - 3,446
Total changes 567 1,427 14,593 16,587
Balance as at 31 December 130,782 (2,301) (39,026) 89,455
2010
Note 22 10&23 10&23
The above consolidated statement of changes in equity should be read in
conjunction with the accompanying notes set out in the annual report available
on www.gold1.co.za
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2010
Note Group Group
31 Dec 31 Dec
2010 2009
A$`000 A$`000
Cash flows from operating activities
Receipts from customers 86,104 7,041
Cash paid to suppliers and employees (50,270) (19,265)
Cash generated from/ (used by) operations 35,834 (12,224)
Finance income 558 1,822
Finance costs (5,648) (7,265)
Income taxes paid 28 (94) (147)
Net cash inflow/ outflow from operating
activities 27 30,650 (17,814)
Cash flows from investing activities
Payments for property, plant and equipment 16 (34,311) (51,331)
Proceeds from sale of property, plant and
equipment 1,243 504
Increase in investments (148) (150)
Increase in deposits - (300)
Net cash outflow from investing activities (33,216) (51,277)
Cash flows from financing activities
Proceeds from issue of shares net of transaction
costs 22 567 55,447
Repayment of financial liabilities designated at
fair value (4,695) (13,481)
Net cash (outflow)/ inflow from financing
activities (4,128) 41,966
Net decrease in cash and cash equivalents (6,694) (27,125)
Cash at beginning of the financial year 11,259 39,254
Effects of exchange rate changes on cash and cash
equivalents (64) (870)
Cash and cash equivalents at end of year 11 4,501 11,259
The above consolidated statement of cash flows should be read in conjunction
with the accompanying notes set out in the annual report available on
www.gold1.co.za
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these
consolidated financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The
financial statements are for the consolidated entity consisting of Gold One
and its subsidiaries.
On 18 May 2009, Gold One, a company incorporated in Australia and listed on
the ASX, inward listed on the JSE and on 25 May 2009 acquired all the issued
ordinary shares in Gold One Africa Limited (Gold One Africa) (formerly Aflease
Gold Limited) (refer note 32). This transaction is accounted for as a reverse
acquisition in accordance with the policy set out in note 1.2.
1.1 BASIS OF PREPARATION
These general purpose financial statements have been prepared in accordance
with Australian Accounting Standards, other authoritative pronouncements of
the Australian Accounting Standards Board ("AASB"), Urgent Issues Group
Interpretations and the Corporations Act 2001.
COMPLIANCE WITH IFRS
The financial statements of Gold One also complies with International
Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB).
HISTORICAL COST CONVENTION
These financial statements have been prepared under the historical cost
convention, as modified by the financial assets and liabilities (including
derivative instruments) at fair value through profit or loss.
PARENT ENTITY FINANCIAL INFORMATION
Following the changes made to the Corporations Act 2001 and the Corporations
Regulations 2010 in June 2010, financial statements of entities that are the
parent entity in the group no longer need to include a complete set of
financial statements for the separate entity. The group has applied this
change from 1 January 2010. Refer to note 36 for more details on parent entity
information.
The financial statements for the parent entity, Gold One, disclosed in note
36, has been prepared on the same basis as for the consolidated financial
statements, except as set out below:
Investment in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are
accounted for at cost in the financial statements of Gold One. Dividends
received from associates are recognised in the parent entity`s profit or loss,
rather than being deducted from the carrying amount of these investments.
PRESENTATION OF FINANCIAL STATEMENTS
The September 2007 revised AASB 1010 requires the separate presentation of a
statement of comprehensive income and a statement of changes in equity, but
will not affect any of the amounts recognised in the financial statements. All
non-owner changes in equity must now be presented in the statement of
comprehensive income. As a consequence, the group had to change the
presentation of its financial statements. If an entity has made a prior period
adjustment or has reclassified items in the financial statements, it will need
to disclose a third statement of financial position, this one being as at the
beginning of the comparative period. The group has applied the revised
standard from 1 January 2009.
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with the Australian-
equivalent to International Financial Reporting Standards ("AIFRS") requires
the use of certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the group`s accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial
statements are disclosed in note 3 of the notes to the financial statements.
1.2 PRINCIPLES OF CONSOLIDATION
SUBSIDIARIES
The consolidated financial statements incorporate the assets and liabilities
of all subsidiaries of Gold One ("company" or "parent entity") as at 31
December 2010 and the results of all subsidiaries for the year then ended.
Gold One and its subsidiaries together are referred to in these financial
statements as the group or the consolidated entity.
Control exists when 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 of an entity so as to obtain benefits from its
activities. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing whether the
group controls another entity.
The results of subsidiaries are included in the consolidated financial
statements from the effective date of acquisition to the effective date of
disposal, and are no longer consolidated from the date that control ceases.
Adjustments are made when necessary to the financial statements of
subsidiaries to bring their accounting policies in line with those of the
group.
Intercompany transactions, balances, and unrealised gains on transactions
between group companies are eliminated in full on consolidation. Unrealised
losses are also eliminated unless the transaction provides evidence of the
impairment of the asset transferred. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with the policies adopted
by the group.
Non-controlling interests in the net assets of consolidated subsidiaries are
identified and recognised separately from the group`s interest therein, and
are recognised within equity. Losses of subsidiaries
attributable to non-controlling interests are allocated to non-controlling
interest even if this results in a debit balance being recognised for non-
controlling interest.
Transactions which result in changes in ownership levels, where the group has
control of the subsidiary both before and after the transaction, are regarded
as equity transactions and are recognised directly in the consolidated
statement of changes in equity.
The difference between the fair value of the consideration paid or received
and the movement in non-controlling interest for the transactions is
recognised in equity attributable to the owners of the parent.
Where a subsidiary is disposed of and a non-controlling shareholding is
retained, the remaining investment is measured to fair value with the
adjustment to fair value recognised in profit or loss as part of the gain or
loss on disposal of the controlling interest.
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.
The group accounts for business combinations using the acquisition method of
accounting. The cost of the business combination is measured as the aggregate
of the fair values of assets given, liabilities incurred or assumed and equity
instruments issued at the date of exchange, plus costs directly attributable
to the business combination.
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.
The cost of the business combination in Gold One`s reverse acquisition in the
prior year is deemed to have been incurred by the legal subsidiary, Gold One
Africa, in the form of equity instruments issued to the owners of the legal
parent, Gold One. 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 / shareholders of the acquirer as they have in
the combined entity as a result of the reverse acquisition. The acquisition-
date fair value of the consideration transferred has been determined by
reference to the fair value of the issued shares of Gold One immediately prior
to the business combination.
Reverse acquisition accounting applies only to the consolidated financial
statements.
1.3 SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The chief operating
decision maker, who is responsible for allocating resources and assessing
performance of the operating segment, has been identified as the Executive
Committee that makes strategic decisions.
1.4 TRANSLATION OF FOREIGN CURRENCIES
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 Australian
Dollar ("A$"), which is the group`s presentation currency. The functional
currency of the company and its subsidiaries is the South African Rand
("ZAR").
TRANSACTIONS AND BALANCES
A foreign currency transaction is recorded in ZAR on initial recognition by
applying the spot exchange rate in ZAR at the date of the transaction.
At the end of the reporting period:
- Foreign currency monetary items are translated using the closing rate;
- Non-monetary items that are measured in terms of historical cost in a
foreign currency are translated using the exchange rate at the date of the
transaction; and
- Non-monetary items that are measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value was
determined.
Exchange differences arising on the settlement of monetary items or on
translating monetary items at rates different from those at which they were
translated on initial recognition during the period or in previous financial
statements are recognised in profit or loss in the period in which they arise.
Exchange differences on assets and liabilities carried at fair value are
reported as a fair value gain or loss.
When a gain or loss on non-monetary items, such as equities classified as
available-for-sale financial assets, is recognised to other comprehensive
income and accumulated in equity, any exchange component of that gain or loss
is recognised to other comprehensive income and accumulated in equity. When a
gain or loss on non-monetary items, such as equities held at fair value
through profit or loss, is recognised in profit or loss, any exchange
component of that gain or loss is recognised in profit or loss.
Cash flows arising from transactions in a foreign currency are recorded in
Rands by applying to the foreign currency amount the exchange rate between the
Rand and the foreign currency at the date of the cash flow.
GROUP COMPANIES
The results and financial position of all 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 consolidated statement of financial position
presented are translated at the closing rate at the date of that consolidated
statement of financial position;
- Income and expenses for each item of profit or loss 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 to other comprehensive
income.
On consolidation, exchange differences arising on a monetary item that forms
part of a net investment in a foreign operation and of borrowings and other
financial instruments designated as hedges of such investments, are recognised
initially to other comprehensive income. They are recognised in profit or loss
as a reclassification adjustment to other comprehensive income on disposal of
the net investment.
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 consolidated statement of comprehensive income, as part of
the profit or loss on sale where applicable.
1.5 COMPARATIVE FIGURES
Share based payment expense was previously included in other expenses in the
consolidated statement of comprehensive income. In the current year the share
based payment expense amount was reclassified and disclosed as part of
salaries and employee benefit expenses under general and administrative
expenditure in the consolidated statement of comprehensive income.
The unwinding of the discount on the asset retirement obligation was
previously included in cost of sales in the consolidated statement of
comprehensive income. In the current year the unwinding of the discount on the
asset retirement obligation was reclassified and disclosed as part of finance
costs in the consolidated statement of comprehensive income.
Finance income was previously included in revenue in the consolidated
statement of comprehensive income. In the current year the finance income
amount was reclassified and disclosed as a separate line item in the
consolidated statement of comprehensive income.
Funds in trust refers to an ongoing dispute with Grinaker-LTA Mining. Funds in
trust was previously included in restricted cash as part of cash and cash
equivalents in the consolidated statement of financial position. In the
current year the funds in trust amount was reclassified and disclosed as part
of trade and other receivables in the consolidated statement of financial
position.
The correction of the classifications resulted in adjustments as follows:
Consolidated Statement of Comprehensive Income Group Group
31 Dec 31 Dec
2010 2009
A$`000 A$`000
Share based payment reclassification
General and administrative expenditure - Salaries and (3,104) (3,451)
employee benefit
expenses
Other expenses - Share based payment expense 3,104 3,451
Unwinding of discount on asset retirement obligation
reclassification
Cost of sales 256 694
Finance costs (256) (694)
Finance income
Revenue (558) (1,822)
Finance income 558 1,822
Consolidated Statement of Financial Position
Restricted cash
Cash and cash equivalents (3,951) (4,009)
Trade and other receivables 3,951 4,009
1.6 PROPERTY, PLANT AND EQUIPMENT
1.6.1 MINING ASSETS
i) MINE DEVELOPMENT AND PLANT FACILITIES
Mine development and plant facilities 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 decommission and land restoration. 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, and, borrowing costs directly attributable
to 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
losses.
ii) MINING EXPLORATION
Exploration costs are expensed as incurred. When there is a high degree of
confidence in the project`s viability and it is probable that the project will
return future economic benefits to the group, all further pre-production
expenditure is capitalised. These costs include evaluation costs.
iii) UNDEVELOPED PROPERTIES
Undeveloped properties include Land as well as Mineral and surface rights.
Land is measured at cost and is not depreciated. Mineral and surface rights
are recorded at cost of acquisition.
Capitalised expenditure on undeveloped properties is reviewed for impairment
at each reporting date. In the case of undeveloped properties, there may be
only inferred resources to form a basis for the impairment review. When there
is little likelihood of mineral rights 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.
Subsequent recovery of the resulting carrying value depends on successful
development of the area of interest or sale of the project. If a project does
not prove viable, all irrecoverable costs associated with the project are
written off.
iv) DEPRECIATION OF MINING ASSETS
Depreciation of mine development costs and plant facilities and mineral and
surface rights is computed principally by the units of production method based
on estimated proven and probable reserves. To the extent that these costs
benefit a portion of the entire ore body, the Buckshot Pyrite Leader Zone
("BPLZ"), they are depreciated over the expected useful lives of the mineral
reserves. Depreciation is first charged on mining ventures from the date on
which the mining ventures are available for intended use. Changes in
depreciation as a result of changes in reserve estimates are made
prospectively.
1.6.2 OTHER PLANT AND EQUIPMENT
Other plant and equipment include motor vehicles and computer and office
equipment.
Other plant and equipment are shown at historical cost less accumulated
depreciation and accumulated impairment losses. Historical cost includes
expenditure directly attributable to the acquisition of the items.
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 profit or
loss during the financial period in which they are incurred.
These assets are depreciated on the straight-line basis to allocate their cost
to their residual values over their estimated useful lives as follows:
Item Average useful life
Motor vehicles 3 - 10 years
Office equipment 3 - 10 years
Computer equipment 3 years
The residual value, useful life and depreciation method of each asset are
reviewed and adjusted as appropriate at the end of each reporting period. If
the expectations differ from previous estimates, the change is accounted for
as a change in accounting estimate.
The 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.
The depreciation charge for each period is recognised in profit or loss unless
it is included in the carrying amount of another asset.
Gains and losses arising from the derecognition and / or disposal of an item
of property, plant and equipment is included in profit or loss when the item
is derecognised. The gain or loss arising from the derecognition of an item of
property, plant and equipment is determined as the difference between the net
disposal proceeds, if any, and the carrying amount of the item.
1.7 GOODWILL
The costs of acquisition are 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 or loss in the consolidated statement of comprehensive income.
Deferred tax on the difference between the fair value and carrying value of
assets and liabilities are considered and accounted for. Goodwill was fully
impaired in 2009.
1.8 INVESTMENTS AND OTHER FINANCIAL ASSETS
CLASSIFICATION
The group classifies financial assets and liabilities into the following
categories:
- Financial assets at fair value through profit or loss;
- Held-to-maturity investments;
- Loans and receivables; and
- Available-for-sale financial assets and liabilities.
Classification depends on the purpose for which the investment and financial
assets were acquired. Management determines the classification of its
investments at initial recognition and, in the case of assets classified as
held-to-maturity, re-evaluates this designation at each reporting date.
FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
Financial assets and liabilities at fair value through profit or loss are
classified as financial assets and liabilities held for trading. A financial
asset or liability is classified in this category if acquired principally for
the purpose of selling in the short term. The group has had short-term
investments classified in this category. A financial asset or 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 at fair value through profit or
loss.
HELD-TO-MATURITY FINANCIAL ASSETS
Held-to-maturity investments 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 reporting date, which are
classified as current assets. The group has long term investments which are
classified in this category.
LOANS AND RECEIVABLES
Loans and receivables are non-derivative financial assets and liabilities with
fixed or determinable payments that are not quoted in an active market. They
are included in current assets or liabilities, except for maturities greater
than 12 months after the reporting date. These are classified as noncurrent
assets or liabilities. The group`s loans and receivables comprise trade and
other receivables, cash and cash equivalents and trade and other payables in
the consolidated statement of financial position.
AVAILABLE-FOR-SALE FINANCIAL ASSETS AND LIABILITIES
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 reporting date.
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, commonly referred to as "day one profit
or loss", is not recognised immediately in profit or loss.
The timing or recognition of deferred day one profit or 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
or loss over the life of the bond to maturity.
Subsequent changes in fair value are recognised immediately in the
consolidated statement of comprehensive income without reversal of deferred
day one profits and losses. The group has elected to amortise the deferred day
one profit or loss over the life of the transaction. The day one loss is
carried as part of the fair value of the convertible bond and the amount
released to profit or loss is included in the fair value adjustment on the
convertible bond. The outstanding day one loss was expensed at the time the
bonds were cancelled and re-issued.
RECOGNITION AND DERECOGNITION
Financial instruments are recognised initially when the group becomes a party
to the contractual provisions of the instruments.
The group classifies financial instruments, or their component parts, on
initial recognition as a financial asset, a financial liability or an equity
instrument in accordance with the substance of the contractual arrangement.
Financial instruments are measured initially at fair value, except for equity
investments for which a fair value is not determinable, which are measured at
cost and are classified as available-for-sale financial assets.
For financial instruments which are not at fair value through profit or loss,
transaction costs are included in the initial measurement of the instrument.
Transaction costs on financial instruments at fair value through profit or
loss are recognised in profit or loss.
Financial assets and liabilities are derecognised when the rights to receive
cash flows from investments have expired or been transferred and the group has
transferred substantially all risks and rewards of ownership.
SUBSEQUENT MEASUREMENT
Financial instruments at fair value through profit or loss are subsequently
measured at fair value, with gains and losses arising from changes in fair
value being included in profit or loss in the period in which they arise.
Net gains or losses on the financial instruments at fair value through profit
or loss exclude dividends and interest.
Dividend income is recognised in profit or loss as part of other income when
the group`s right to receive payment is established.
Loans and receivables are subsequently measured at amortised cost, using the
effective interest method, less accumulated impairment losses.
Held-to-maturity investments are subsequently measured at amortised cost,
using the effective interest method, less accumulated impairment losses.
Available-for-sale financial assets are subsequently measured at fair value.
This excludes equity investments for which a fair value is not determinable,
which are measured at cost less accumulated impairment losses.
Gains and losses arising from changes in fair value are recognised in other
comprehensive income and accumulated in equity until the asset is disposed of
or determined to be impaired. Interest on available-for-sale financial assets
calculated using the effective interest method is recognised in profit or loss
as part of other income. Dividends received on available-for-sale equity
instruments are recognised in profit or loss as part of other income when the
group`s right to receive payment is established.
Changes in fair value of available-for-sale financial assets denominated in a
foreign currency are analysed between translation differences resulting from
changes in amortised cost and other changes in the carrying amount.
Translation differences on monetary items are recognised in profit or loss,
while translation differences on non-monetary items are recognised in other
comprehensive income and accumulated in equity.
Changes in the fair value of other monetary and non-monetary securities
classified as available-forsale are recognised in equity.
IMPAIRMENT OF FINANCIAL ASSETS
At each reporting date the group assesses all financial assets, other than
those at fair value through profit or loss, to determine whether there is
objective evidence that a financial asset or group of financial assets has
been impaired.
For amounts due to the group, significant financial difficulties of the owing
entity, probability that it will enter bankruptcy and default of payments are
all considered indicators of impairment.
In the case of equity securities classified as available-for-sale, a
significant or prolonged decline in the fair value of the security below its
cost is considered an indicator of impairment. If any such evidence
exists for available-for-sale financial assets, the cumulative loss, measured
as the difference between the acquisition cost and current fair value, less
any impairment loss on that financial asset previously recognised in profit or
loss, is removed from equity as a reclassification adjustment to other
comprehensive income and recognised in profit or loss.
Impairment losses are recognised in profit or loss.
Impairment losses are reversed when an increase in the financial asset`s
recoverable amount can be related objectively to an event occurring after the
impairment was recognised, subject to the restriction that the carrying amount
of the financial asset at the date that the impairment is reversed shall not
exceed what the carrying amount would have been had the impairment not been
recognised.
Reversals of impairment losses are recognised in profit or loss except for
equity investments classified as available-for-sale.
Impairment losses are also not subsequently reversed for available-for-sale
equity investments which are held at cost because fair value was not
determinable.
Where financial assets are impaired through use of an allowance account, the
amount of the loss is recognised in profit or loss within operating expenses.
When such assets are written off, the write off is made against the relevant
allowance account. Subsequent recoveries of amounts previously written off are
credited against operating expenses.
1.9 TRADE RECEIVABLES
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest rate method less
provision for impairment. Appropriate allowances for estimated irrecoverable
amounts are recognised in profit or loss when there is objective evidence that
the asset is impaired. Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy or financial reorganisation,
and default or delinquency in payments (more than 30 days overdue) are
considered indicators that the trade receivable is impaired. The allowance
recognised is measured as the difference between the asset`s carrying amount
and the present value of estimated future cash flows discounted at the
effective interest rate computed at initial recognition.
The carrying amount of the asset is reduced through the use of an allowance
account, and the amount of the loss is recognised in profit or loss within
operating expenses. When a trade receivable is uncollectable, it is written
off against the allowance account for trade receivables. Subsequent recoveries
of amounts previously written off are credited in the consolidated statement
of comprehensive income.
1.10 CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and demand deposits, deposits
held at call with financial institutions and other short-term highly liquid
investments that are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value and bank overdrafts.
These are initially and subsequently recorded at fair value.
Bank overdrafts are shown within borrowings in current liabilities on the
consolidated statement of financial position.
1.11 TRADE PAYABLES
Trade payables are initially measured at fair value, and are subsequently
measured at amortised cost, using the effective interest rate method.
1.12 INVENTORIES
Inventories are valued at the lower of cost and net realisable value and
include bullion stock and spares and consumables.
BULLION STOCK (STOCKPILES, GOLD IN PROCESS, ORE IN LEACH TANKS AND PRODUCT
INVENTORIES)
Costs that are incurred in or benefit the production process are accumulated
as stockpiles, gold in process, ore in leach tanks and product inventories.
Net realisable value tests are performed at least annually and represent the
estimated future sales price of the product based on prevailing spot metal
prices at the reporting date, less estimated costs to complete production and
bring the product to sale. Stockpiles are measured by estimating the number of
tonnes added and removed from the stockpile, the number of contained gold
ounces based on assay data and the estimated recovery percentage based on the
expected processing method. Stockpile tonnages are verified by periodic
surveys. Low grade stockpiles are not valued.
Gold on hand represents production on hand after the smelting process.
Cost is determined based on gold on hand and gold in process, valued using the
weighted average cost method. Cost includes production, depreciation and
amortisation and related administration costs.
SPARES AND CONSUMABLES
The cost of spares and consumables include the purchase price, import duties
and other taxes, transport, handling and all other costs directly attributable
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.
1.13 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.
1.14 CURRENT AND DEFERRED INCOME TAX
CURRENT TAX ASSETS AND LIABILITIES
The income tax expense or revenue for the period is the tax payable on the
current period`s taxable income based on the applicable income tax rate for
each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and unused tax losses.
Current tax assets and liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis, or to
realise the asset and settle the liability simultaneously.
DEFERRED TAX ASSETS AND LIABILITIES
A deferred tax liability is recognised for all taxable temporary differences,
except to the extent that the deferred tax liability arises from the initial
recognition of an asset or liability in a transaction which at the time of the
transaction, affects neither accounting profit nor taxable profit / (tax
loss).
A deferred tax asset is recognised for all deductible temporary differences
and unused tax losses to the extent that it is probable that future taxable
amounts will be available against which the deductible temporary difference
and losses can be utilised. A deferred tax asset is not recognised when it
arises from the initial recognition of an asset or liability in a transaction,
at the time of the transaction, and affects neither accounting profit nor
taxable profit.
A deferred tax asset is recognised for the carry forward of unused tax losses
and unused tax credits to the extent that it is probable that future taxable
profit will be available against which the unused tax losses and unused tax
credits can be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply to the period when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are not recognised for temporary
differences between the carrying amount and tax bases of investments in
controlled entities where the parent entity is able to control the timing of
the reversal of the temporary differences and it is probable that the
differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets and liabilities and when the
deferred tax balance relate to the same taxation authority.
Current and deferred tax balances attributable to amounts recognised directly
in equity are also recognised directly in equity.
1.15 LEASES
OPERATING LEASES - LESSEE
A lease is classified as an operating lease if it does not transfer
substantially all the risks and rewards incidental to ownership.
Operating lease payments (net of any incentives received from the lessor) are
recognised as an expense on a straight-line basis over the lease term.
1.16 IMPAIRMENT OF NON-FINANCIAL ASSETS
The group assesses at the end of the reporting period whether there is any
indication that non-financial assets may be impaired. If any such indication
exists, the group estimates the recoverable amount of the asset.
Irrespective of whether there is any indication of impairment, the group also:
- Tests intangible assets with an indefinite useful life or intangible assets
not yet available for use for impairment annually, as it is not subject to
amortisation, by comparing its carrying amount with its recoverable amount.
This impairment test is performed during the annual period and at the same
time every period; and
- Tests goodwill acquired in a business combination for impairment annually as
it is not subject to amortisation.
If there is any indication that an asset may be impaired, the recoverable
amount is estimated for the individual asset. If it is not possible to
estimate the recoverable amount of the individual asset, the recoverable
amount of the cash-generating unit (assets are grouped at the lowest level for
which there are separately identifiable cash flows) to which the asset belongs
is determined.
The recoverable amount of an asset or a cash-generating unit is the higher of
its fair value less costs to sell and its value in use.
If the recoverable amount of an asset is less than its carrying amount, the
carrying amount of the asset is reduced to its recoverable amount. That
reduction is an impairment loss.
An impairment loss of assets carried at cost less any accumulated depreciation
or amortisation is recognised immediately in profit or loss.
Goodwill acquired in a business combination is, from acquisition date,
allocated to each of the cash generating units, or groups of cash-generating
units, that are expected to benefit from its synergies.
An entity assesses at each reporting date whether there is any indication that
an impairment loss recognised in prior periods for non-financial assets other
than goodwill may no longer exist or may have decreased. If any such
indication exists, the recoverable amounts of those assets are estimated.
The increased carrying amount of an asset other than goodwill attributable to
a reversal of an impairment loss does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the
asset in prior periods.
A reversal of an impairment loss of assets carried at cost less accumulated
depreciation or amortisation other than goodwill is recognised immediately in
profit or loss.
1.17 PROVISIONS
ASSET RETIREMENT OBLIGATIONS
The group recognises 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 recognises 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, based on disturbance to date, for the estimated
future costs of pollution control and rehabilitation, in accordance with
environmental and regulatory requirements.
Changes in the obligation due to damage caused during the production phase are
recognised in profit or loss.
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 recognised in the
consolidated 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 recognised 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 is amortised over the life of the mine.
1.18 EMPLOYEE BENEFITS
WAGES AND SALARIES
Liabilities for wages and salaries, including non-monetary benefits and annual
leave expected to be settled within 12 months of the reporting date are
recognised in other payables in respect of employees` services up to the
reporting date and are measured at the amounts expected to be paid when the
liabilities are settled.
SHARE BASED PAYMENTS
Share based compensation benefits are provided to employees via the Gold One
International Employee Option Plan, Replacement Option Terms and the Gold One
International Share Incentive Scheme. The fair value of options granted under
the Gold One International Employee Option Plan, Replacement Option Terms and
the Gold One International Share Incentive Scheme is recognised as an employee
benefit expense with a corresponding increase in equity. The fair value is
measured at grant date and recognised over the period during which the
employees become unconditionally entitled to the options.
The fair value at grant date is independently determined using a Binomial
option pricing model that takes into account the exercise price, term of the
option, impact of dilution, share price at grant date and expected price
volatility of the underlying share, expected dividend yield and risk free
interest rate for the term of the option.
The fair value of the options granted is adjusted to reflect market vesting
conditions, but excludes the impact of any non-market vesting conditions (for
example, profitability and sales growth targets). Nonmarket vesting conditions
are included in assumptions about the number of options that are expected to
become exercisable. At each reporting date, the entity revises its estimate of
the number of options that are expected to become exercisable. The employee
benefit expense recognised each period takes into account the most recent
estimate.
The impact of the revision to original estimates, if any, is recognised in
other comprehensive income with a corresponding adjustment to equity.
TERMINATION BENEFITS
Termination benefits are payable when employment is terminated before the
normal retirement date, or when an employee accepts voluntary redundancy in
exchange for these benefits. The group recognises termination benefits when it
is demonstrably committed to either terminating the employment of current
employees according to a detailed formal plan without possibility of
withdrawal of providing termination benefits as a result of an offer made to
encourage voluntary redundance. Benefits falling due more than 12 months after
reporting date are discounted to present value.
1.19 REVENUE RECOGNITION
Revenue is measured at the fair value of the consideration received or
receivable and represents the amounts receivable for goods and services
provided in the normal course of business, net of returns, trade discounts and
volume rebates and amounts collected on behalf of third parties, and value
added tax. The group recognises revenue when the amount of revenue can be
reliably measured, it is probable that future economic benefits will flow to
the entity and specific criteria have been met for each of the group`s
activities as described below. The amount of revenue is not considered to be
reliably measurable until all contingencies relating to the sale have been
resolved. The group bases its estimates on historical results, taking into
consideration the type of customer, the type of transaction and the specifics
of each arrangement.
SALE OF GOLD AND SERVICES
Gold revenue is recognised when the significant risks and rewards of ownership
of the gold has passed to the buyer and can be measured reliably. Risks and
rewards are considered passed to the buyer at the time of delivery, being when
the gold leaves the processing plant and is collected by Rand Refinery.
INTEREST INCOME
Finance income comprises interest income on funds invested. Interest income is
recognised, in profit or loss, on a time proportion basis, taking account of
the principal outstanding and the effective interest rate over the period to
maturity, when it is determined that such income will accrue to the group.
1.20 EARNINGS OR LOSS PER SHARE
BASIC EARNINGS OR LOSS PER SHARE
Basic earnings or loss per share is computed by dividing the profit
attributable to owners of the company, excluding any costs of servicing equity
other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the year, adjusted for bonus elements in ordinary shares
during the year and excluding treasury shares.
DILUTED EARNINGS/ LOSS PER SHARE
Diluted earnings or loss per share adjusts the figures used in the
determination of basic earnings or loss per share to take into account the
after income tax effect of interest and other financing costs associated with
dilutive potential ordinary shares, and the weighted average number of
additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
1.21 FINANCE COSTS
Finance costs comprise interest expense on borrowings, financial liabilities
designated at fair value through profit or loss and unwinding of the discount
on provisions.
Foreign currency gains and losses are reported on a net basis.
1.22 ROUNDING
The company is of a kind referred to in Class Order 98/100, issued by the
Australian Securities and Investments Commission, relating to the "rounding
off" of amounts in the financial statements. Amounts in the financial
statements have been rounded off in accordance with that Class Order to the
nearest thousand Australian Dollar, or in certain cases, the nearest
Australian Dollar.
1.23 GOODS AND SERVICES TAX ("GST") AND VALUE ADDED TAX ("VAT")
Revenues, expenses and assets are recognised net of the amount of associated
GST and VAT, unless the GST and VAT incurred is not recoverable from the
taxation authority. In this case it is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST and VAT
receivable or payable. The net amount of GST and VAT recoverable from, or
payable to, the taxation authority is included with other receivables or
payables in the consolidated statement of financial position.
Cash flows are presented on a gross basis. The GST and VAT components of cash
flows arising from investing or financing activities which are recoverable
from, or payable to the taxation authority, are presented as operating cash
flows.
1.24 NEW STANDARDS AND INTERPRETATIONS
Certain new accounting standards and interpretations have been published that
are not mandatory for the 31 December 2010 reporting period. The group`s
assessment of the impact of these new standards and interpretations is set out
below:
1.24.1 STANDARDS AND INTERPRETATIONS NOT YET EFFECTIVE
AASB INTERPRETATION 19 EXTINGUISHING FINANCIAL LIABILITIES WITH EQUITY
INSTRUMENTS AND AASB 2009 - 13 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS
ARISING FROM INTERPRETATION 19
AASB Interpretation 19 clarifies the accounting when an entity renegotiates
the terms of its debt with the result that the liability is extinguished by
the debtor issuing its own equity instruments to the creditor (debt for equity
swap). It requires a gain or loss to be recognised in profit or loss which is
measured as the difference between the carrying amount of the financial
liability and the fair value of the equity instrument issued.
The effective date of the amendment is for years beginning on or after 01 July
2010. The group expects to adopt the amendment for the first time from 01
January 2011.
It is unlikely that the amendment will have a material impact on the group`s
financial statements, since it is only retrospectively applied from the
beginning of the earliest period presented (01 January 2010) and the group has
not entered into any debt for equity swaps since that date.
REVISED AASB 124 RELATED PARTY DISCLOSURES AND AASB 2009 - 12 AMENDMENTS TO
AUSTRALIAN ACCOUNTING STANDARDS
In December 2009 the AASB issued as revised AASB 124 Related Party
Disclosures. It must be applied retrospectively. The amendment removes the
requirement for government-related entities to disclose details of all
transactions with the government and other government-related entities and
clarifies and simplifies the definition of a related party.
The effective date of the amendment is for years beginning on or after 01
January 2011. The group expects to adopt the amendments for the first time
from 01 January 2011.
It is unlikely that the amendment will have a material impact on the group as
the group does not carry any investments in associates.
AASB 9 AND AASB 2009 - 11 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS
ARISING FROM AASB 9 FINANCIAL INSTRUMENTS
AASB 9 Financial Instruments addresses the classification and measurement of
financial assets and is likely to affect the group`s accounting for its
financial assets.
The effective date of the amendment is for years beginning on or after 01
January 2013. The group has not yet decided when to adopt AASB 9.
The group is unable to reliably estimate the impact of the amendment on the
financial statements. However, initial indications are that it may affect the
group`s accounting for its available-for-sale financial assets, since AASB 9
only permits the recognition of fair value gains or losses in other
comprehensive income if they relate to equity investments that are not held
for trading. Fair value gains and losses on available-for-sale investments,
for example, will therefore have to be recognised directly in profit or loss.
AASB 9 FINANCIAL INSTRUMENTS
In December 2010 the AASB issued AASB 9 Financial Instruments. The objective
of this standard is to establish principles for the financial reporting of
financial assets and financial liabilities that will present relevant and
useful information to users of financial statements for their assessment of
the amounts, timing and uncertainty of an entity`s future cash flows. The
company must apply this standard to all items within the scope of AASB 139
Financial Instruments: Recognition and Measurement.
The company must, upon initial recognition, recognise a financial asset or a
financial liability in its statement of financial position when, and only
when, the entity becomes party to the contractual provisions of the
instruments. When an entity first recognises a financial asset, it shall
classify it in accordance with the requirements set-out in the standard and
measure it in accordance with the same requirements. When a company first
recognises a financial liability, it shall classify it in accordance with the
requirements of this standard. A regular way purchase or sale of financial
assets shall be recognised and derecognised, as applicable, using trade date
accounting or settlement date accounting.
The effective date of the standard is for years beginning on or after 01
January 2013 and early adoption is permitted. However, if the company elects
to apply this standard early and has not already applied AASB 9 Financial
Instruments issued in December 2009, it must apply all of the requirements in
this standard at the same time. The company must also disclose that it chose
early adoption and at the same time apply the amendments in AASB 2010 - 7
Amendments to Australian Accounting Standards arising from AASB 9 (December
2010). The group has not yet decided when to adopt AASB 9.
AASB 2010 - 3 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS ARISING FROM THE
ANNUAL IMPROVEMENTS PROJECT (AASBS 3, 7, 121, 128, 131, 132 & 139)
The objective of this standard is to make amendments to AASB 3 Business
Combinations (Measurement of non-controlling interests, Unreplaced and
voluntarily replaced share-based payments awards and Transition requirements
for contingent consideration from a business combination that occurred before
the effective date of the revised AASB 3 (2008)), AASB 7 Financial
Instruments: Disclosures (Transition requirements for contingent consideration
from a business combination that occurred before the effective date of the
revised AASB 3 (2008)), AASB 121 The Effects of Changes in Foreign Exchange
Rates (Transition requirements for amendments arising as a result of AASB 127
Consolidated and Separate Financial Statements), AASB 128 Investments in
Associates (Transition requirements for amendments arising as a result of AASB
127 Consolidated and Separate Financial Statements), AASB 131 Interests in
Joint Ventures (Transition requirements for amendments arising as a result of
AASB 127 Consolidated and Separate Financial Statements), AASB 132 Financial
Instruments: Presentation (Transition requirements for contingent
consideration from a business combination that occurred before the effective
date of the revised AASB 3 (2008))and AASB 139 Financial Instruments:
Recognition and Measurement (Transition requirements for contingent
consideration from a business combination that occurred before the effective
date of the revised AASB 3 (2008))as a consequence of the annual improvements
project.
The effective date of the amendment is for years beginning on or after 01 July
2010. The group will adopt the amendment for the first time in the 2011
financial statements.
AASB 2010 - 4 FURTHER AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS ARISING
FROM THE ANNUAL IMPROVEMENTS PROJECT (AASBS 1, 7, 101 & 134 AND INTERPRETATION
13)
The objective of this standard is to make amendments to AASB 1 First-time
Adoption of Australian Accounting Standards (Accounting policy changes in the
year of adoption, Revaluation basis as deemed cost and Use of deemed cost for
operations subject to rate regulation), AASB 7 Financial Instruments:
Disclosures (Clarification of disclosures), AASB 101 Presentation of Financial
Statements (Clarification of statement of changes in equity), AASB 134 Interim
Financial Reporting(Significant events and transactions) and Interpretation 13
Customer Loyalty Programmes (Fair value of award credits) as a consequence of
the annual improvement project.
The effective date of the amendment is for years beginning on or after 01
January 2011. The group will adopt the amendment for the first time in the
2011 financial statements.
AMENDMENTS TO AASB 7 DISCLOSURES TRANSFERS OF FINANCIAL ASSETS
The amendments introduce new disclosure requirements about transfers of
financial assets including disclosures for: financial assets that are not
derecognised in their entirety and financial assets that are derecognised in
their entirety, but for which the entity retains continuing involvement.
The effective date of the amendment is for annual reporting periods beginning
on or after 01 July 2011. The group will adopt the amendment for the first
time in the 2012 financial statements.
1.24.2 STANDARDS AND INTERPRETATIONS EARLY ADOPTED
The group has chosen not to early adopt any of the new standards and
interpretations.
1.24.3 STANDARDS AND INTERPRETATIONS EFFECTIVE AND ADOPTED IN THE CURRENT
YEAR
In the current year, the group has adopted the following standards and
interpretations that are effective for the current financial year and that are
relevant to its operations:
AASB 2009 - 10 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS: AASB 132
CLASSIFICATION OF RIGHTS ISSUES
In October 2009 the AASB issued an amendment to AASB 132 Financial
Instruments: Presentation, which addresses the accounting for rights issues
that are denominated in a currency other than the functional currency of the
issuer. Provided certain conditions are met, such rights issues are not
classified as equity regardless of the currency in which the exercise price is
denominated. Previously these issues had to be accounted for as derivative
liabilities. The amendment must be applied retrospectively in accordance with
AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.
The effective date of the amendment is for years beginning on or after 01
February 2010. The group has adopted the amendment for the first time in the
2010 financial statements.
AASB 2009 - 8 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS: AMENDMENTS TO
AASB 2 GROUP CASH-SETTLED SHARE-BASED PAYMENT TRANSACTIONS
The amendments made by the AASB to AASB 2 confirm that an entity receiving
goods or services in a group share-based payment arrangement must recognise an
expense for those goods or services regardless of which entity in the group
settles the transaction or whether the transaction is settled in shares or
cash. They also clarify how the group share-based payment arrangement should
be measured, that is, whether it is measured as an equity- or a cash-settled
transaction. The group will apply these amendments retrospectively.
The effective date of the amendment is for years beginning on or after 01
January 2010. The group has adopted the amendment for the first time in the
2010 financial statements.
For the full set of notes please see pages 54 to 102 of the annual report
available on www.gold1.co.za
On behalf of the Board
Neal Froneman Christopher Chadwick
Chief Executive Officer Chief Financial Officer
28 February 2010
Johannesburg, South Africa
JSE SPONSOR
Macquarie First South Advisers (Pty) Limited
CORPORATE DIRECTORY
Australia South Africa
Registration ABN 35 094 265 746 2009/000032/10
Number
Registered Level 3 First Floor, 45 Empire Road
Office 100 Mount Street Parktown
North Sydney NSW 2060 Gauteng 2193
Telephone: +612 9963 6400 Telephone: + 27 11 726 1047
Facsimile: +612 9963 6499 Facsimile: + 27 11 726 1087
Board of Non-Executive Directors
Directors Mark K Wheatley (Chairman)
Barry E Davison
Kenneth V Dicks
William B Harris
Sandile Swana
Kenneth J Winters
Executive Directors
Neal J Froneman (Chief Executive Officer)
Christopher D Chadwick (Chief Financial Officer)
Secretaries Kellie M Pickering Pierre B Kruger
Auditors PricewaterhouseCoopers
Darling Park Tower 2
201 Sussex Street
Sydney NSW 2000
Share Registries Limited Computershare Investor
Registries 28 Margaret Street Services (Proprietary) Limited
Sydney NSW 2000 70 Marshall Street
Telephone: +612 9290 9600 Johannesburg 2001
Facsimile: +612 9279 0664 Telephone: +27 11 370 5000
Facsimile: +27 11 370 5220
Solicitors Blake Dawson Edward Nathan Sonnenbergs
2 The Esplanade 1 North Wharf Square
Perth WA 6000 Loop Street
Foreshore
Cape Town 8001
Bankers Commonwealth Bank of ABSA Bank Limited
Australia Corporate Banking
Institutional Banking 15 Alice Lane
Level 22, Darling Park Sandton
Tower 1 2196
201 Sussex Street
Sydney NSW 2000
Trustee for Deutsche Trustee Company Limited
Bondholders Winchester House
1 Great Winchester Street
London EC2N 2DB
Stock Primary Listing Secondary Listing
Exchange Australian Securities Johannesburg Stock Exchange
Listings Exchange JSE Limited ("JSE")
ASX Limited ("ASX") One Exchange Square
20 Bridge Street Gwen Lane, Sandton 2196
Sydney NSW 2000 Ticker: GDO
Ticker: GDO
American OTCQX International
Depository Ticker: GLDZY
Receipts Level 1 ADR Sponsor
("ADRs") The Bank of New York Mellon
Depository Receipts Division
101 Barclay Street, 22nd Floor
New York 102386 USA
Website Address www.gold1.co.za
Website www.gold1.co.za
address
About Gold One
Gold One is a gold producer listed on the financial markets operated by the
ASX Limited and the JSE Limited, issuer code GDO. Its flagship operation is
the newly built shallow Modder East mine on the East Rand, some 30 kilometres
from Johannesburg.
Modder East is the first new mine to be built in the region in 28 years and
distinguishes itself from most of the other gold mines in South Africa owing
to its shallow nature (300 metres to 500 metres below surface). To date Modder
East has provided direct employment opportunities for over 1 100 people. Gold
One also owns the nearby existing Sub Nigel mine, which is used primarily as a
training centre in the build-up of Modder East to full production. Gold One`s
other projects and targets include Ventersburg in the Free State Goldfields,
the Tulo concession in Mozambique and the Etendeka greenfield project in
Namibia. Gold One has an issued share capital of 807 080 905 shares.
Forward-Looking Statement
This release includes certain forward-looking statements and forward-looking
information. All statements other than statements of historical fact included
in this release including, without limitation, statements regarding future
plans and objectives of Gold One International Limited are forward-looking
statements (or forward-looking information) that involve various risks,
assumptions and uncertainties. There can be no assurance that such statements
will prove to be accurate and actual values, results and future events could
differ materially from those anticipated in such statements. Important factors
could cause actual results to differ materially from Gold One`s expectations.
Such factors include, among others: the actual results of exploration
activities; actual results of reclamation activities; the estimation or
realisation of mineral reserves and resources; the timing and amount of
estimated future production; costs of production; capital expenditures; costs
and timing of the development of Modder East and new deposits; availability of
capital required to place Gold One`s properties into production; the ability
to obtain or maintain a listing in South Africa, Australia, Europe or North
America; conclusions of economic evaluations; changes in project parameters as
plans continue to be refined; future prices of gold and other commodities;
possible variations in ore grade or recovery rates; failure of plant,
equipment or processes to operate as anticipated; accidents; labour disputes
and other risks of the mining industry; delays in obtaining governmental
approvals, permits or financing or in the completion of development or
construction activities, economic and financial market conditions; political
risks; Gold One`s hedging practices; currency fluctuations; title disputes or
claims limitations on insurance coverage. Although Gold One has attempted to
identify important factors that could cause actual results to differ
materially, there may be other factors that cause results not to be as
anticipated, estimated or intended.
Any forward-looking statements in this release speak only at the time of
issue. There can be no assurance that such statements will prove to be
accurate as actual values, results and future events could differ materially
from those anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. Gold One does not
undertake to update any forward-looking statements that are included herein,
or revise any changes in events, conditions or circumstances on which any such
statement is based, except in accordance with applicable securities laws and
stock exchange listing requirements.
Competent Person`s Statement
Competent Person
The information in this report that relates to exploration results, mineral
resources or ore reserves is based on information compiled by Dr Richard
Stewart, who has a doctorate in geology and who is a professional natural
scientist registered with the South African Council for Natural Scientific
Professions ("SACNASP"), membership number 400051/04. Dr Stewart is also a
member of the Geological Society of South Africa ("GSSA") and the vice
president of geology for Gold One, with which he is a full-time employee. He
has 10 years` experience which is relevant to the style of mineralisation and
type of deposit under consideration, and to the activity which he is
undertaking, to qualify as a Competent Person for the purposes of both the
2004 Edition of the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves ("JORC Code") and the 2007 Edition of the
South African Code for Reporting of Exploration Results, Mineral Resources and
Mineral Reserves ("SAMREC Code"). Dr Stewart consents to the inclusion in this
report of the matters based on information compiled by Gold One employees and
it`s consultants in the form and context in which they appear. Further
information on Gold One`s resource statement is available in the pre-listing
statement of Gold One International Limited issued on 19 December 2008 and in
the resource statements released by Gold One on the ASX Company Announcements
Platform and the Stock Exchange News Service (SENS) on 11 October 2010
(Megamine), 7 December 2010 (Ventersburg) and 15 December 2010 (Modder East).
SAMREC and JORC terminology
In addition, this report uses the terms `indicated resources` and `inferred
resources` as defined in accordance with the SAMREC Code, prepared by the
South African Mineral Resource Committee ("SAMREC"), under the auspices of the
South African Institute of Mining and Metallurgy ("SAIMM"), effective March
2000 or as amended from time to time and where indicated in accordance with
the Canadian National Instrument 43-101 - Standards for Disclosure for Mineral
Projects. The terms `indicated resources` and `inferred resources` are also
defined in the 2004 Edition of the JORC Code, prepared by the Joint Ore
Reserves Committee ("JORC") of the Australasian Institute of Mining and
Metallurgy ("AusIMM"), the Australian Institute of Geoscientists (AIG) and the
Minerals Council of Australia ("MCA"). The use of these terms in this report
is consistent with the definitions of both the SAMREC Code and the JORC Code.
A mineral reserve (or "ore reserve" in the JORC Code) is the economically
mineable part of a measured or indicated resource demonstrated by at least a
preliminary feasibility study. This study must include adequate information on
mining, processing, metallurgical, economic and other relevant factors that
demonstrate at the time of reporting that economic extraction can be
justified. A mineral reserve includes diluting materials and allows for losses
that may occur when the material is mined. A proved mineral reserve (or
"proved ore reserve" in the JORC Code) is the economically mineable part of a
measured resource for which quantity, grade or quality, densities, shape and
physical characteristics are so well established that they can be estimated
with confidence sufficient to allow the appropriate application of technical
and economic parameters to support production planning and evaluation of the
economic viability of the deposit. A probable mineral reserve (or "probable
ore reserve" in the JORC Code) is the economically mineable part of an
indicated mineral resource for which quantity, grade or quality, densities,
shape and physical characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and economic
parameters to support mine planning and evaluation of the economic viability
of the deposit.
A mineral resource is a concentration or occurrence of natural, solid,
inorganic or fossilised organic material in or on the earth`s crust in such
form and quantity and of such a grade or quality that it has reasonable
prospects for economic extraction. The location, quantity, grade, geological
characteristics and continuity of a mineral resource are known, estimated or
interpreted from specific geological evidence and knowledge. A measured
mineral resource is that part of a mineral resource for which quantity, grade
or quality, densities, shape and physical characteristics can be estimated
with a level of confidence sufficient to allow the appropriate application of
technical and economic parameters to support mine planning and evaluation of
the economic viability of the deposit. The estimate is based on detailed and
reliable exploration, sampling and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits,
workings and drillholes that are spaced closely enough to confirm both
geological and grade continuity. An indicated mineral resource is that part of
a mineral resource for which quantity, grade or quality, densities, shape and
physical characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical
and economic parameters to support mine planning and evaluation of the
economic viability of the deposit. The estimate is based on detailed and
reliable exploration and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits, workings and
drillholes that are spaced closely enough for geological and grade continuity
to be reasonably assumed.
An inferred mineral resource is that part of a mineral resource for which
quantity and grade or quality can be estimated on the basis of geological
evidence and limited sampling and reasonably assumed, but not verified,
geological and grade continuity. The estimate is based on limited exploration
and sampling gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drillholes. Mineral resources which are
not mineral reserves do not have demonstrated economic viability. Investors
are cautioned not to assume that all or any part of the mineral deposits in
the measured and indicated resource categories will ever be converted into
reserves. In addition, "inferred resources" have a great amount of uncertainty
as to their existence and economic and legal feasibility. It cannot be assumed
that all or any part of an inferred mineral resource will be ever be upgraded
to a higher category. Under South African and Australian rules, estimates of
inferred mineral resources may not form the basis of feasibility or pre-
feasibility studies or economic studies except under conditions noted in the
SAMREC Code and the JORC Code, respectively.
Investors are cautioned not to assume that all or any part of an inferred
resource exists or is economically or legally mineable. Exploration data is
acquired by Gold One and its consultants under strict quality assurance and
quality control protocols.
No stock exchange, securities commission or other regulatory authority has
approved or disapproved the information contained herein.
Date: 28/02/2011 07:05:27 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
