Chief Executive Officer s Review 4. Auditor s Independence Declaration 34. Corporate Governance Statement 36

Transcription

1 2012 ANNUAL REPORT

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3 Contents Corporate Directory 2 Chief Executive Officer s Review 4 Company Review 6 Directors Report 18 Auditor s Independence Declaration 34 Corporate Governance Statement 36 Consolidated Statement of Comprehensive Income 45 Consolidated Statement of Financial Position 46 Consolidated Statement of Changes in Equity 47 Consolidated Statement of Cash Flows 48 Notes to the Financial Statements 49 Directors Declaration 106 Independent Auditor s Report 108 Shareholder Information 110 Competent Persons Statement 112 1

4 2 Corporate Directory

5 Corporate Directory Australia South Africa Board of Directors Non-Executive Directors Yalei Sun (Chairman) Allan Liu Robert Chan Chao Zhou Michael Solomon Executive Directors Christopher Chadwick (CFO and Acting CEO) Registration Number ABN /000032/10 Registered Office Level Mount Street North Sydney NSW 2060 Constantia Office Park Bridgeview House, Ground Floor Corner 14th Avenue and Hendrik Potgieter Street Weltevreden Park 1709 Telephone: Telephone: Facsimile: Facsimile: Company Secretaries Kim Hogg Pierre Kruger Auditors PricewaterhouseCoopers Darling Park Tower Sussex Street Sydney NSW 2000 Share Registries Solicitors Bankers Stock Exchange Listings Boardroom (Pty) Limited Level 7, 207 Kent Street Sydney NSW 2000 Telephone: Facsimile: Ashurst (Australia) LLP 2 The Esplanade Perth WA 6000 Commonwealth Bank of Australia Institutional Banking Level 22, Darling Park Tower Sussex Street Sydney NSW 2000 Primary Listing Australian Securities Exchange ASX Limited ( ASX ) 20 Bridge Street Sydney NSW 2000 Ticker: GDO Computershare Investor Services (Pty) Limited 70 Marshall Street Johannesburg 2001 Telephone: Facsimile: Edward Nathan Sonnenbergs 1 North Wharf Square Loop Street, Foreshore Cape Town 8001 ABSA Bank Limited Corporate Banking 15 Alice Lane Sandton 2196 Secondary Listing Johannesburg Stock Exchange JSE Limited ( JSE ) One Exchange Square, Gwen Lane Sandton 2196 Ticker: GDO American Depository Receipts ( ADRs ) OTCQX International Level 1 ADR Sponsor The Bank of New York Mellon Depository Receipts Division 22nd Floor, 101 Barclay Street, New York Ticker: GLDZY Website Addresses 3

6 Chief Executive Officer s Review Dear Shareholder The 2012 year was one of significant transformation for Gold One International Limited and its subsidiaries ( Gold One or the company ) and was characterised by considered and strategic transactions. Following the conclusion of the Jintu Transaction on 30 December 2011, described in the Corporate Governance Statement section of this report, and the introduction of the BCX Consortium, described in the Company Review section of this report, as Gold One s new majority shareholder, Gold One concluded the acquisitions of Rand Uranium (Pty) Limited ( Rand Uranium ) and Ezulwini Mining Company (Pty) Limited ( Ezulwini ) during the first half of 2012 for US$250 million and US$70 million respectively. These strategic acquisitions enabled the company to not only bolster its production profile, but also to pursue an uranium co-product strategy by realising the uranium potential that exists across the Cooke Underground Complex (Cooke 1, 2, 3 and Ezulwini). The Randfontein Surface Operations, created through Gold One s splitting of Rand Uranium s underground and surface assets into two distinct business units, has also allowed Gold One to begin consolidating surface retreatment opportunities within Johannesburg s West Rand. This opportunity is being further explored via a joint venture with Gold Fields Limited ( Gold Fields ) and now Sibanye Gold Limited ( Sibanye Gold ). 4

7 Chief Executive Officer's Report Before the close of the March 2012 quarter Gold One successfully spun out its medium-depth Megamine assets into Goliath Gold Mining Limited ( Goliath Gold ), a gold explorer and developer in which Gold One holds a 72% controlling interest. The vending of the Megamine assets into Goliath Gold enabled Gold One to unlock value from these assets while still maintaining operational focus on the ramping up of the Modder East Operations, the integration of Ezulwini into the Cooke Underground complex as Cooke 4, the turnaround of the Cooke Underground Operations, and the growth of Gold One s surface business. The synergetic potential present within the Gold One and Goliath Gold relationship was also highlighted during the year under review when the companies jointly announced their planned acquisitions of selected assets belonging to Pamodzi Gold East Rand (Pty) Limited ( Pamodzi Gold East Rand ) and its subsidiaries, which are in provisional liquidation. The 2012 year was not without difficulties as the company experienced illegal industrial action at the Modder East Operations during June as well as at Cooke 4 (Ezulwini) during October. Despite these difficulties the Gold One Team proved its resilience. At Modder East a two year wage agreement was signed on 31 October 2012 with the National Union of Mineworkers ( NUM ). At Cooke 4 a memorandum of understanding was entered into with both NUM and the Congress of South African Trade Unions (COSATU) on 12 November 2012, which saw the lifting of Cooke 4 s operational suspension. At the Cooke Underground Operations a restructuring process during the December 2012 quarter reduced the labour complement by approximately 1,400 people and facilitated the continuation of the operation s turnaround strategy as well as its return to profitability. With an appropriate cost structure now in place for all four shafts, the integration of Cooke 4 into the Cooke Underground complex is set to continue and will further enhance the operation s cost profile while also allowing for the uranium co-product strategy to be actively progressed. At the Randfontein Surface Operations the Cooke Gold Plant Optimisation Project, described in the Company Review section of this report, is anticipated to further expand what has already proven to be a highly successful surface retreatment operation. On 29 November 2012 Gold One announced the resignation of CEO Neal Froneman and the appointment of myself, Christopher Chadwick, as acting CEO. I will also continue to act as CFO. Neal, who was instrumental in the creation of Gold One in 2009, has been appointed as CEO of Sibanye Gold, which will hold the South African assets (excluding South Deep) previously belonging to Gold Fields. Neal leaves a legacy of delivery, empowerment and entrepreneurship within Gold One, and the strong platform and management team that Neal created will continue to stand Gold One in good stead as we work towards achieving our strategic goals. The reconstitution of the Gold One Board was announced on 30 December 2012 following the expiry of the one year transition period prescribed in the transaction implementation agreement with the BCX Consortium. The Gold One Board has been streamlined to include seven directors, four of whom will be independent, and will continue to be chaired by Yalei Sun. Despite the challenges of 2012 the operations ended the year positively and I have every confidence that they are well positioned for strong performance in Christopher Chadwick (CFO and acting CEO) 27 February 2013 Johannesburg, South Africa 5

8 Company Review Gold One is an ASX and JSE listed mid-tier mining group with gold operations and gold and uranium prospects across Southern Africa, and is focused on developing and mining low technical risk, high margin precious metal resources in diversified mining friendly jurisdictions. The company is majority-owned by BCX Gold Investment Holdings Limited ( the BCX Consortium ) comprising Baiyin Non-Ferrous Group Co. Limited ( Baiyin Non-Ferrous Group ), the China-Africa Development Fund ( CAD Fund ), and Long March Capital Limited ( Long March Capital ). Gold One was created on 18 May 2009 via the inward listing of the company formerly known as 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. Gold One s flagship asset, the Modder East gold mine, was brought into production in 2009 and is located in Johannesburg s East Rand. At the beginning of 2012 the Gold One Group expanded with the acquisition of Rand Uranium, consisting of the Cooke 1-3 Underground Operations and the Randfontein Surface Operations located in the West Rand, 30 kilometres from Johannesburg. During mid-2012 Gold One also completed a transaction with First Uranium Corporation ( First Uranium ) and acquired 100% of Ezulwini, giving the company access to gold and uranium metallurgical processing plants with nameplate capacities of 200,000 and 100,000 tonnes per month, respectively. Ezulwini is contiguous to the company s Cooke Underground and Randfontein Surface Operations and was historically known as the Cooke 4 Shaft. Access to Ezulwini s uranium production facility will allow for near term production of uranium from underground ore mined from the Cooke Shafts. In addition, the sharing of services between Ezulwini and the Cooke Underground Operations will facilitate a reduction in operating costs. An integrated plan incorporating Ezulwini into the greater Cooke Underground Operations is underway, and Ezulwini is now once again known as Cooke 4. The Cooke assets, together with Modder East, produced 241,755 ounces for the 2012 year. This is compared to 123,179 ounces produced during 2011 and was achieved amid disruptive illegal industrial action that took place at the Modder East Operations during June 2012 and at Cooke 4 during October Gold One s operations are supported by a significant project pipeline comprising both gold and uranium resources in various stages of development, from feasibility and pre-feasibility studies to greenfield exploration projects across Southern Africa. Gold One is the 72% majority shareholder of Goliath Gold, a South African JSE-listed gold explorer and developer. Goliath Gold purchased the Megamine assets from Gold One on 28 March

9 Company Review HEALTH, SAFETY, THE ENVIRONMENT, SUSTAINABLE DEVELOPMENT AND SOCIAL UPLIFTMENT Gold One achieved a group 2012 lost time injury frequency rate ( LTIFR ) of 1.42 for every 200,000 hours worked compared to 0.54 in Regrettably five separate fatalities occurred across two of the company s operations. Gold One remains committed to achieving injury-free operations and best practices are continually entrenched across the Gold One Group through the company s safety motto that nothing is so important that it cannot be done safely. All safety endeavours and thorough and sustainable safety practises remain key managerial focuses throughout Gold One. Following the acquisitions of the Cooke 1-3 Underground, Randfontein Surface and Cooke 4 Underground assets during the 2012 year, extensive culture induction programmes were undertaken across the newly acquired operations to familiarise employees with Gold One s seven golden values of respect, participation, honesty, integrity, accountability, delivery and fun. Gold One s employee philosophy that you are the One in Gold One has also been firmly entrenched at the newly acquired operations. Gold One remains committed to sustainably empowering its workforces by promoting and facilitating life skills training for employees. Adult Basic Education Training, which provides conceptual foundation skills for illiterate adults and ultimately provides access to national diplomas, and study assistance programmes are provided across all of the company s operations. Gold One has also continued to show its commitment towards the economic upliftment of women by maintaining at least 10% of women in mining. On-site clinics and continuous wellness campaigns ensure that all Gold One employees have access to free and effective healthcare and health knowledge. To aid in the development of Gold One s mining communities, an agricultural co-operative was initiated during the year under review for the communities associated with the Cooke 1-4 Underground Operations and the Randfontein Surface Operations. This co-operative currently supports 20 beneficiaries. The Modder East Operations Slovo Park agricultural co-operative is continuing strongly and currently supports 15 beneficiaries, of whom most are women. KEY COMPANY DATA AS AT 31 DECEMBER 2012 Issuer Code Shares in Issue Share Price Market Cap (Diluted) Options in Issue 2012 PERFORMANCE GDO 1.42 billion A$0.35 A$ million million Gold Production ounces ounces Lost-Time Injury Frequency Rate (Per Hours Worked) 1.42 LTIFR 0.54 LTIFR Net Profit After Tax A$ million A$ million Earnings Per Share A$0.02 A$0.06 Cash Generated From Operations A$(7.706 million) A$ million Group Free Cash Flow 1 A$( million) A$ million Average Realised Gold Price Per Ounce Sold US$1 460/oz US$1 572/oz Group Cash Cost 2 US$1 192/oz US$491/oz Group Total Cost 3 US$1 388/oz US$719/oz 1 Group free cash flow refers to cash available from group operations before interest charges and taxation. 2 Cash cost refers to costs directly associated with mining activities, mine administration, processing and refining. 3 Total cost refers to the sum of cash costs, depreciation and royalties. Capital expenditure, finance costs and corporate costs are excluded from total cost. 7

10 2012 HIGHLIGHTS 5 January Gold One announces it has exceeded its 2011 production target of ounces, resulting in the Jintu Transaction claw-back, or adjustment subscription, not being triggered 6 January Rand Uranium acquisition is closed 24 January Gold One and Gold Fields announce plans to investigate a joint venture for the retreatment of the companies combined West Rand surface tailings deposits 29 February Record profit of US$70.96 million announced for 2011 financial year and Gold One Board reconstituted with effect from 1 March 2012 following the completion of the Jintu Transaction 2 March Binding letter of agreement entered into with First Uranium to acquire 100% of the gold and uranium producing Ezulwini Mine for US$70 million 20 March All conditions precedent regarding the acquisition of Gold One s Megamine assets by Goliath Gold are fulfilled or waived, resulting in Gold One becoming the majority, 72%, shareholder in Goliath Gold 30 March Binding sale of shares and claims agreement is signed for the acquisition of Ezulwini 3 April Financing is secured through the Investec Bank facility (announced on 29 August 2011) and a US$75 million unsecured shareholder loan facility 17 April Gold One and Goliath Gold enter into an acquisition agreement with the joint provisional liquidators representing Pamodzi Gold East Rand and its subsidiaries to acquire underground data and selected assets for ZAR70 million 26 April Wayne Robinson is appointed as executive vice president of Gold One s South African operations 1 August Acquisition of Ezulwini is completed 31 October New two year wage deal for Modder East is signed with NUM following illegal industrial action at the operation during June 12 November Operations resume at Cooke 4 following operational suspension imposed on 16 October due to illegal industrial action at the operation during the same month 29 November Gold One CFO Christopher Chadwick assumes role of CFO and acting CEO with effect from 31 December 2012 following the resignation of Neal Froneman 30 December Board is reconstituted following the closure of the one year transition period stipulated by the transaction implementation agreement entered into with the BCX Consortium LOCATION OF ASSETS Cooke Undergound Operations and Randfontein Surface Operation N Randfontein Surface Project Cooke Uranium Project East Rand East Rand Goldfield Modder North Project New Kleinfontein and Turnbridge Project Modder East Operation Goliath Gold Free State Goldfield Ventersburg Project km Projects Operations Mozambique Tulo Project 100% interest in concession to a 22,000 hectares prospecting area in northern Mozambique, with open cast potential. 8

11 Company Review GOLD ONE S MINERAL (ORE) RESERVES AND MINERAL RESOURCES Gold One has updated the mineral resource and mineral (ore) reserve estimations for Modder East, the Cooke 1-3 Underground Operations and the Randfontein Surface Operations. Updated mineral resource estimations for Goliath Gold, Ventersburg and the Modder North projects are currently being undertaken and will be completed during the March 2013 quarter. The mineral resources for the Turnbridge and New Kleinfontein projects have been reviewed but remain unchanged from those reported in the company s 2011 annual report. The mineral resources and mineral (ore) reserves for the Cooke 4 Operation are undergoing a full review and updated estimations will be completed during the June 2013 quarter. The company s total gold resource base now totals 32.3 million ounces comprising a total of million ounces in the measured and indicated category (440.8 million tonnes at 1.37 grams per tonne) and million ounces in the inferred category (114.7 million tonnes at 3.49 grams per tonne). Total proved and probable reserves now total 3.64 million ounces (122.7 million tonnes at 0.92 grams per tonne). In addition the company has declared uranium (U 3 O 8 ) mineral resources and mineral (ore) reserves at the Cooke 1-3 Underground Operations and the Randfontein Surface Operations. Total uranium resources include 85.9 million pounds comprising 82.8 million pounds in the measured and indicated category (315.0 million tonnes at 0.12 kilograms per tonne) and 3.1 million pounds in the inferred category (2.6 million tonnes at 0.54 kilograms per tonne). Proved and probable uranium reserves total 36.6 million pounds (88.5 million tonnes at 0.19 kilograms per tonne). As at the release date of this annual report Gold One s estimated gold and uranium mineral (ore) reserves and mineral resources are as stated in the table below. Gold One Consolidated Mineral Resource Statement 1 Gold Uranium Tonnes Grade Gold Content Tonnes Grade Uranium Content (Mt) (g/t) (Moz) (Mt) (kg/t) (Mlbs) Measured Modder East Cooke 1-3 Underground Randfontein Surface Total Measured Indicated Modder East Cooke 1-3 Underground Randfontein Surface Ventersburg Turnbridge Goliath Gold Total Indicated Total Measured and Indicated Inferred Modder East Cooke 1-3 Underground Ventersburg Turnbridge New Kleinfontein Goliath Gold Total Inferred Total Measured, Indicated and Inferred Mineral resources are reported in accordance with SAMREC guidelines (estimates would be identical if reported in accordance with JORC standards). Mineral resources are reported inclusive of ore reserves. 2 Cut-off values have been reported using a gold price of ZAR450,000/kg (US$1750/oz and ZAR8:US$1). 3 Cut-off values have been reported using a gold price of ZAR450,000/kg (US$1750/oz and ZAR8:US$1) and a uranium price of $65/lb, and an exchange rate of ZAR8:US$1. The uranium tonnes are a subset of the gold tonnes. 4 Cut-off values have been calculated using a gold price of US$1550/oz and an exchange rate of ZAR8:US$1. Signed-off by Dr I.C. Lemmer, independent resource consultant to Gold One, audited by SRK Consulting. 5 Signed-off by S. Meadon, SRK Consulting. Reported at a cut-off of 200 cmg/t, calculated using a gold price of US$1,250/oz and an exchange rate of ZAR8:US$1. 6 Signed-off by Camden Geoserve, independent resource consultants to Gold One, audited by SRK Consulting. Reported at a cut-off of 200 cmg/t, calculated using a gold price of US$750/oz and an exchange rate of ZAR7:US$1. 7 Reported as 72% attributable to Gold One based on Gold Ones equity portion of Goliath Gold. Cut-off values have been calculated using a gold price of US$1130/oz and an exchange rate of ZAR7.70:US$1. 9

12 Gold One Consolidated Mineral (Ore) Reserve Statement 1 Gold Uranium Tonnes Grade Gold Content Tonnes Grade Uranium Content (Mt) (g/t) (Moz) (Mt) (kg/t) (Mlbs) Proved Modder East Cooke 1-3 Underground Randfontein Surface Total Proved Probable Modder East Cooke 1-3 Underground Randfontein Surface Total Probable Probable and Proved Reserves Mineral (ore) reserves are reported in accordance with SAMREC guidelines (estimates would be identical if reported in accordance with JORC standards). Mineral reserves are planned for extraction using a gold price of ZAR450,000/kg (US$1750/oz and ZAR8:US$1). 2 Mineral reserves are planned for extraction using an uranium price of US$45/lb and ZAR8:US$1 up to end 2015 and an uranium price of US$65/lb and ZAR8:US$1 from Mineral reserves are planned for extraction using an uranium price of US$65/lb and ZAR8:US$1. OPERATIONS MODDER EAST OPERATIONS Modder East is Gold One s flagship mine and is the only new mine to be built in South Africa s historically rich East Rand Goldfield in 30 years. Situated 30 kilometres east of Johannesburg, the operation comprises a shallow gold mine where the primary targets are Black Reef and UK9A Kimberley Reef, which are situated between 300 and 500 metres below surface. Gold One advanced Modder East from a greenfield exploration project through to production and the project currently has a 10 year life of mine. Development at Modder East began in 2006 and the mine s first gold was produced in July Mining at Modder East employs a combination of conventional and mechanised mining techniques and access to the orebody is via a trackless decline from surface to the footwall of the reef horizons. The decline serves as a roadway for vehicles to transport material into and out of the mine while a vertical shaft provides transport for personnel as well as ventilation. Modder East also has a dedicated gold treatment facility with a capacity of 100,000 tonnes per month. The Modder East Operations have continued to ramp up in production and produced 97,958 ounces of gold at an average cash cost of US$686/oz during This was derived from 474,754 Black Reef milled tonnes at an average recovered grade of 6.00 grams per tonne as well as the milling of 139,887 tonnes of low grade development ore and waste with an average recovered grade of 1.43 grams per tonne. The Modder East Metallurgical Plant maintained recoveries of 95% for As part of the transaction with the joint provisional liquidators representing Pamodzi Gold East Rand and its subsidiaries (see Pamodzi East Rand Operations in the projects pipeline section of this Company Review) Gold One has applied for a prospecting right covering the area that is immediately down dip and contiguous to Modder East. This application has been accepted by the Department of Mineral Resources and is currently being processed. This largely unmined area is highly prospective with surrounding mining data suggesting continuity of the UK9A orebody. The UK9A Reef currently comprises some 28% of Modder East s existing ore reserve and the down dip extension has the potential to substantially increase Modder East s current mine life of 10 years. Gold One intends confirming this down dip extension through a surface exploration drilling programme. The contiguous down dip extension could be accessed through Modder East s planned infrastructure, thus reducing the requirement for substantial additional project capital and ensuring mining remains disconnected from historical flooded underground workings. Updated mineral resource and ore reserve estimations at Modder East have considered the depletion of mined mineral resources during the year as well as an increased cut-off grade associated with anticipated increased costs. Minor changes to the UK9A Reef mineral resource were considered where underground development has successfully exposed this orebody. The updated resource estimates have been used to update the Modder East Operations life of mine and associated ore reserves. Mining 10

13 Company Review depletion and increased cut-off grades resulted in the total measured and indicted mineral resources decreasing year on year by 7% to 2.58 million ounces (including million tonnes grading at 2.83 grams per tonne). Inferred mineral resources increased by 19% to 1.56 million ounces (including million tonnes grading at 1.38 grams per tonne). The increase in inferred mineral resources was largely the result of enhanced geological modelling on the Black Reef Basal Unit (previously referred to as the channel facies ), facilitated by underground exposure associated with on-reef Black Reef development. Total ore reserves decreased by 11% to 1.19 million ounces (including 8.57 million tonnes at 4.33 grams per tonne) largely as a result of mining depletion and, to a lesser extent, increased cut-off grades associated with increased costs. Tonnes Grade Gold Content (Mt) (g/t) (Moz) Measured Buckshot Pyrite Leader Zone + Basal Unit Total Measured Indicated Buckshot Pyrite Leader Zone + Basal Unit Black Reef Basal Unit UK9A Buckshot Pyrite Leader Zone Total Indicated Total Indicated and Measured Inferred Buckshot Pyrite Leader Zone + Basal Unit Black Reef Basal Unit UK9A UK Buckshot Pyrite Leader Zone Total Inferred Total Resource Mineral resources are reported in accordance with SAMREC guidelines (estimates would be identical if reported in accordance with JORC standards). Cut-off values have been reported using a gold price of ZAR450,000/kg (US$1750/oz and ZAR8:US$1). Mineral resources are reported inclusive of ore reserves. 2 Signed-off by J. Glanville of Glanville Consulting, independent resource consultant to Gold One, audited by SRK. Reported at a cut-off of 171 cmg/t. 3 Signed-off by J. Glanville of Glanville Consulting, independent resource consultant to Gold One, audited by SRK, reported at a cut-off of 233 cmg/t. 4 Signed-off by Minxcon, independent resource consultants to Gold One, audited by SRK, restated at revised cut-off off at 166 cmg/t. 5 Signed-off by Minxcon, independent resource consultants to Gold One, audited by SRK, reported at a cut-off of 496 cmg/t. 6 Signed-off by Shango Solutions, independent resource consultants to Gold One, audited by SRK, reported at a cut-off of 141 cmg/t. Modder East Mineral (Ore) Reserve Statement 1 Tonnes Grade Gold Content (Mt) (g/t) (Moz) Proved Buckshot Pyrite Leader Zone + Basal Unit Total Proved Probable Buckshot Pyrite Leader Zone + Basal Unit UK9A Total Probable Total Reserve Mineral (ore) reserves are reported in accordance with SAMREC guidelines (estimates would be identical if reported in accordance with JORC standards). Mineral reserves are planned for extraction using a pay limit based on a gold price of ZAR450,000/kg (US$1750/oz and ZAR8:US$1). 2 Reported at a pay limit of 192 cmg/t. 3 Reported at a pay limit of 183 cmg/t. 11

14 COOKE 1-3 UNDERGROUND OPERATIONS The Cooke Underground Operations are situated near Randfontein on the outskirts of western Johannesburg and comprise three vertical shafts, namely, Cooke 1, 2 and 3, which are serviced by a developed network of mining and civil infrastructure with adequate electricity and water supplies. Mining is shallow (less than 1,000 meters) with limited seismicity or heat challenges and the underground orebodies are mined by means of conventional hard rock mining methods involving drilling, blasting, scraping, tramming and hoisting. Ore mined at Cooke 1-3 is currently treated at the Cooke Gold Plant as well as at the nearby Doornkop Plant where a toll-treatment agreement is in place with Harmony Gold Mining Company Limited. The operations current shaft infrastructure is under-utilised, allowing for expansion as additional economic ore reserves are defined. The primary mining horizons are the Elsburg, Kimberly and Ventersdorp Contact Reefs. In addition to gold deposits, certain of these reefs, specifically at Cooke 2 and 3, host significant uranium deposits. Ongoing exploration and resource development work has highlighted numerous potential resource extension opportunities and these areas have been prioritised as the focus of further exploration activities. Successful exploration results in these areas have the potential to increase operational flexibility as well as extend the operations life. One of the key objectives associated with the acquisition of Rand Uranium was to re-establish the Cooke Underground Operations as gold mines and subsequently develop uranium co-product potential. During 2012 the operational turnaround strategy therefore focused on enhancing gold operational flexibility and efficiency. For the 2012 year, the Cooke 1-3 Underground Operations produced 98,451 ounces at an average cash cost of US$1,558/oz. This production was derived from the treatment of 961,802 milled tonnes at an average recovered grade of 3.17 grams per tonne as well as the treatment of 39,650 milled tonnes of low grade development and waste material at an average recovered grade of 0.34 grams per tonne. Plant recoveries for the operation were 95% for A feasibility study was completed during the year under review on a high uranium yielding area at Cooke 3, which consists of both unmined ground and a number of higher grade pillars. The area (referred to as the Priority Area 2 and water pillar) is associated with existing underground development. The feasibility considers uranium extraction through the Cooke 4 Uranium Plant. Phase 1 of the uranium plant upgrade will see the 50,000 tonne per month module operating at full capacity at an estimated capital cost of ZAR13 million (US$1.55 million). The company envisages commencing the uranium co-product strategy during The previous resource estimation completed at the Cooke 1-3 Underground Operations was undertaken in June Gold One s complete review of the Cooke 1-3 Underground Operations mineral resources and mineral (ore) reserves has included revised geological modelling (where appropriate), additional information obtained from underground operations since June 2010, increased cut-off grades associated with increased mining costs and revised commodity prices, and depletion of the mineral resource due to mining activities since Mineral resource classification criteria were also reviewed considering geostatistical parameters utilised for resource estimation. Total measured and indicated mineral resources increased by 4% to 8.93 million ounces grading at 4.67 grams per tonne, while inferred mineral resources increased by 26% to 2.21 million ounces grading at 4.50 grams per tonne. The overall increase in gold mineral resources is largely due to increased resources associated with the Kimberley and Elsburg Reef Horizons at the Cooke 1 Shaft, where enhanced geological modelling facilitated the definition of additional mineral resources not previously defined. Mineral resources at the Cooke 2 and 3 Shafts decreased by 28% and 5% respectively due to increased cut-off grades associated with increasing costs and mining depletion. Uranium resources at the Cooke 1-3 Underground Operations include a total of million pounds (including million tonnes grading at 0.48 kilograms per tonne); a 31% decrease in total uranium resources relative to the June 2010 mineral resource estimation. This decrease is largely due to revised mineral resource classifications and increased cut-off grades associated with increased costs and decreased commodity prices. Measured and indicated uranium mineral resources comprise million pounds grading at 0.47 kilograms per tonne, a 19% decrease relative to previous estimations, and inferred mineral resources include 3.12 million pounds grading at 0.54 kilograms per tonne, a 71% decrease relative to previous resource estimations. Total gold (ore) reserves at the Cooke 1-3 Underground Operations have decreased from 1.96 million ounces (including million tonnes at 3.70 grams per tonne) in 2010 to 1.47 million ounces (including 9.51 million tonnes at 4.82 grams per tonne). The updated gold (ore) reserves have considered mining depletion since June 2010 as well as increased cut-off grades associated with higher mining costs. Although the increased cut-off grades have negatively impacted the total gold content, (ore) reserve grades have increased by 30%. Uranium ore reserves have decreased from 6.16 million pounds (including 9.71 million tonnes grading at 0.29 kilograms per tonne) in 2010 to 2.26 million pounds (including 2.23 million tonnes grading at 0.46 kilograms per 12

15 Company Review tonne). The substantial reduction in underground uranium ore reserves is largely as a result of increased cut-off grades associated with reduced commodity prices and increased costs. This is reflected in the substantial increase in uranium ore reserve grade of 59%. On-going uranium modelling is continuing to optimise the potential co-product nature of the Cooke mineral resources. Cooke 1-3 Underground Mineral Resource Statement 1 Gold Uranium Tonnes Grade Gold Content Tonnes 4 Grade Uranium Content (Mt) (g/t) (Moz) (Mt) (kg/t) (Mlbs) Measured Cooke Cooke Cooke Total Measured Indicated Cooke Cooke Cooke Total Indicated Total Indicated and Measured Inferred Cooke Cooke Cooke Total Inferred Total Resource Mineral resources are reported in accordance with SAMREC guidelines (estimates would be identical if reported in accordance with JORC standards). Mineral resources are reported inclusive of ore reserves. Where ore is to go through the uranium recovery plant, the gold mineral resources must have a gold equivalent cut-off of 2.9 g/t, or a combined gold cut-off grade of 2.5 g/t with an uranium fraction cut-off at 0.184kg/t. The gold equivalent grade is calculated as 1g/t Au = kg/t U3O8. The U3O8 mineral resource is declared at a cut-off grade of Kg/t within the gold resource, or as a co-product with gold at the gold equivalent cut-off of 2.9 g/t. The gold equivalence ratio is calculated at a gold price of $1750/oz and at a uranium price of $65/lb, and an exchange rate of ZAR8:US$1. The U3O8 tonnes are a subset of the Au tonnes. The balance of the Au tonnes contain gold above the gold cut-off grade but uranium below the uranium cut-off grade, and will therefore bypass the uranium recovery plant. Signed-off by Dr I.C. Lemmer, independent resource consultant to Gold One, audited by SRK Consulting. Cooke 1-3 Underground Mineral (Ore) Reserve Statement 1 Gold Uranium Tonnes Grade Gold Content Tonnes Grade Uranium Content (Mt) (g/t) (Moz) (Mt) (kg/t) (Mlbs) Proved Cooke Cooke Cooke Total Proved Probable Cooke Cooke Cooke Total Probable Total Reserve Mineral (ore) resreves are reported in accordance with SAMREC guidelines (estimates would be identical if reported in accordance with JORC standards). The mineral reserves are planned for extraction using a pay limit that is based on a gold price of ZAR450,000/kg (US$1750/oz and ZAR8:US$1) and an uranium price of US$45/lb and ZAR8:US$1 up to end 2015 and an uranium price of US$65/lb and ZAR8:US$1 from Pay limit values are 4.55 g/t, 4.63 g/t and 4.15 g/t for Cooke 1, Cooke 2 and Cooke 3 respectively. Audited by SRK Consulting. 13

16 COOKE 4 UNDERGROUND OPERATIONS Cooke 4 is contiguous to Gold One s Cooke 1-3 Operations and is an underground mine that has two primary tabular orebodies approximately 400 metres vertically apart. The Upper Elsburg orebody, where the majority of mining has been done to date, is primarily gold bearing. The Middle Elsburg orebody is a gold and uranium bearing deposit that has been less extensively mined. The establishment of Cooke 4 was substantially completed during the last quarter of 2009 while the operation was still under the ownership of First Uranium. This included the rehabilitation and re-engineering of the main shaft through the installation of a floating steel tower and the construction of a gold plant with nameplate capacity of up to 200,000 tonnes per month and a uranium plant with nameplate capacity of up to 100,000 tonnes per month. As Cooke 4 was historically part of the larger Cooke 1-3 Underground complex, Gold One s immediate focus has been right-sizing the operation, which was completed during December 2012, and integrating Cooke 4 into the existing Cooke 1-3 Underground Operations. The planned turnaround programme and shared synergies between the four shafts will reduce operating costs and increase operational efficiencies. With access to Cooke 4 s uranium processing facility, Gold One can unlock the value of the joint underground resources and begin capitalising on a gold and uranium co-product strategy. Since Gold One assumed managerial control, Cooke 4 produced gold in the months of August, September and December only due to illegal industrial action that temporarily halted the operation during October and November. For the three months 8,493 ounces were produced. Total production for 2012 comprised 82,951 milled tonnes at an average recovered grade of 3.18 grams per tonne. Due to the fact that the metallurgical plant was stopped for two months during the illegal industrial action, plant recoveries averaged 82% over the reporting period. RANDFONTEIN SURFACE OPERATIONS The Randfontein Surface Operations host gold and uranium surface resources on its mining property, including the Cooke Tailings Dam, Millsite, Lindum, Dump 20 Slime and the Old 4 Dam. These resources present a pipeline of economically attractive opportunities that could significantly expand the existing surface treatment operations. The Cooke Gold Plant, which is located on the Randfontein Surface Operations property, has been processing the mechanically reclaimed Dump 20 sand for the past five years at a rate of approximately 300,000 tonnes per month. Tailings residues have been deposited onto the Cooke Tailings Dam. The plant is a conventional gold recovery circuit with milling of the coarse sand feed in a closed circuit and is able to mill both reef from the Cooke Underground Operations and sand material from Dump 20. The historical gold head grade for the reclaimed Dump 20 material has averaged 0.46 grams per tonne with recoveries averaging 72%. This has resulted in a residue grade of grams per tonne which is among the lowest in the South African industry for these types of surface treatment operations. During 2012 the Cooke Gold Plant Optimisation Project was initiated, and is discussed in further detail under the projects section on this Company Review. For the 2012 year the Randfontein Surface Operations produced 36,853 ounces from 3,286,633 milled tonnes at an average cash cost of US$1,137/oz. Recovered grades during the year averaged grams per tonne, with a gold recovery rate of 72%. An extensive exploration drilling programme was undertaken at the Randfontein Surface Operations during 2012 and included the drilling of Dump 20, Dump 4, the Millsite Complex and the Cooke 2 Slimes. These drilling results, combined with additional drilling undertaken by Rand Uranium of the Cooke Dam in 2010, were utilised to update the mineral resources and mineral (ore) reserves of the surface resources. Total surface resources include 2.72 million ounces of gold grading at grams per tonne, all of which are in the measured and indicated resource categories. This represents a 12% decrease relative to previous resource estimations. This reduction in resources is due to depletions associated with the mining of Dump 20 as well as enhanced exploration drilling information. Due to the extensive exploration drilling programme at the Millsite Complex, the uranium mineral resources increased by 23% to million pounds (grading at 86 grams per tonne). Despite continued mining of Dump 20 the definition of additional surface resources at Dump 20 and Cooke 2 have facilitated only a marginal reduction in total gold (ore) reserves from 0.99 million ounces (grading at 0.32 grams per tonne) in 2010, to 0.97 million ounces (grading at 0.29 grams per tonne). Uranium (ore) reserves associated with the Cooke Dam have remained largely unchanged at million pounds, including 86.3 million tonnes grading at 181 grams per tonne. 14

17 Company Review Randfontein Surface Mineral Resource Statement 1,2 Gold Uranium Tonnes Grade Gold Content Tonnes Grade Uranium Content (Mt) (g/t) (Moz) (Mt) (kg/t) (Mlb) Measured Cooke Dam Lindum 1 and Millsite Complex Dump Millsite Complex Dump Millsite Complex Dump 40/ Millsite Complex Dump 39 Buttress Valley Dam Dump 20 Sand Dump 20 Slime Main Dump 20 Slime NW Cooke 2 Slimes Total Measured Indicated Cooke Dam Lindum 1A and Dump 20 Slime Main Dump 20 Slime NW Old No.4 Dump Total Indicated Total Indicated and Measured Inferred Total Inferred Total Resource Mineral resources are reported in accordance with SAMREC guidelines (estimates would be identical if reported in accordance with JORC standards) considering a gold price of ZAR450,000/kg (US$1750/oz and ZAR8:US$1) and an uranium price of US$65/lb and ZAR8:US$1. Total in-situ mineral resources are estimated. Mineral resources are reported inclusive of ore reserves. 2 Signed-off by SRK Consulting, independent resource consultants to Gold One. 3 Mineral Resources as declared by Rand Uranium (2010) prior to Gold One acquisition and currently under review by Gold One. 4 Signed off by Mr C Muller of Minxcon, independent resource consultant to Gold One. 5 Signed-off by Mr F de Bruin of Deswik Mining Consultants, independent resource consultants to Gold One. Randfontein Surface Mineral (Ore) Reserve Statement 1,2 Gold Uranium Tonnes Grade Gold Content Tonnes Grade Uranium Content (Mt) (g/t) (Moz) (Mt) (kg/t) (Mlb) Proved Cooke Dam Dump 20 Sand Dump 20 Slime Main Dump 20 Slime NW Cooke 2 Slimes Total Proved Probable Cooke Dam Dump 20 Slime Main Dump 20 Slime NW Total Probable Total Reserve Mineral (ore) reserevs are reported in accordance with SAMREC guidelines (estimates would be identical if reported in accordance with JORC standards) considering a gold price of ZAR450,000/kg (US$1750/oz and ZAR8:US$1) and an uranium price of US$65/lb and ZAR8:US$1. 2 Mineral reserves considers the total extraction of in-situ mineral resources. 15

18 PROJECTS PIPELINE COOKE GOLD PLANT OPTIMISATION PROJECT The Cooke Gold Plant Optimisation Project is intended to increase the Cooke Gold Plant s nameplate capacity from 300,000 tonnes per month to 400,000 tonnes per month to achieve improved economies of scale, reduce plant operating costs, and secure an alternative deposition site to the Cooke Dump. The principal opportunity that has been identified is to change the surface reclamation strategy from a sand-only mechanically reclaimed source to a combination of hydraulically reclaimed slimes and mechanically reclaimed sand, thereby reducing reclamation costs and plant milling costs. The tailings residue will be deposited into abandoned open pits, which will provide deposition capacity until approximately During 2012 significant progress was made with the project s engineering design and costing. The pipeline route and specialist environmental studies were concluded. Submissions to obtain authorisation to proceed with construction in early 2013 were also made, and orders for long lead time items were placed. Construction of the project is planned to commence during early COOKE PILLAR EXTRACTION PROJECT Significant opportunities have been identified at the Cooke Underground Operations to mine historical gold bearing pillar areas. These areas could be selectively extracted at high margins that would impact positively on total mine profitability and mining flexibility. The feasibility study considering the implementation of backfill at the Cooke 2 and Cooke 3 Shafts is well advanced. At Cooke 2 the reserve scheduling of the initial Venterdorp Contact Reef and the UE7 footwall targets has been completed, indicating an initial target in excess of 80,000 ounces of recoverable gold. Further detailed investigations into adjacent Venterdorp Contact Reef and UE7 areas at Cooke 2 are currently being conducted. At Cooke 3 A1 pillar re-mining and A2 Reef horizon potential are also being investigated. Preliminary backfill plant designs have been completed and detailed design will commence during the March 2013 quarter. Indicative construction periods are between eight and 12 months after the receipt of environmental authorisation. WEST RAND TAILINGS JOINT VENTURE At the beginning of 2011 Gold One announced that it had entered into a memorandum of understanding with Gold Fields to investigate the feasibility of establishing a joint venture in which both parties will contribute surface tailings deposits in the West Rand of Johannesburg for retreatment. These joint tailing are expected to comprise in excess of 700 million tonnes and represent over 60% of the total tailings material in the region. A detailed joint scoping study was completed during 2012 and a decision was taken to fast-track to a joint pre-feasibility assessment given the significant amount of technical and economic work that has already been undertaken by the two companies. During the pre-feasibility assessment a comprehensive metallurgical test work programme will be carried out on Gold One s Millsite and Old 4 Dam tailings facilities and further strategic phasing of capital and scheduling of available feed material will also be optimised. The outcome of the pre-feasibility study is expected during the September 2013 quarter. Following Gold Fields s unbundling of its South African assets (excluding South Deep) into Sibanye Gold during November 2012, the joint venture is continuing with Sibanye Gold. VENTERSBURG The Ventersburg exploration project represents Gold One s most advanced exploration project and is located in the South African Free State Goldfield. A feasibility study is currently being undertaken and is primarily aimed at validating and refining the mine design criteria and associated costing considered during the pre-feasibility study. Drilling of the eastern payshoot at Ventersburg was undertaken during 2011 and this was completed during 2012, confirming the open ended nature of the eastern most payshoot area. Infill drilling was also completed with the objective of enhancing confidence in the initial five years of mine planning. In addition, a light detecting area ranging survey was carried out to facilitate the completion of the surface infrastructure design. Mine design criteria have been validated and refined and metallurgical test work, infrastructure designs and specialist studies are all underway. The Ventersburg feasibility study is expected to be completed during the September 2013 quarter. 16

19 Company Review MODDER NORTH Modder North is located approximately six kilometres north of Modder East and falls within Modder East s current mining licence area. Exploration commenced at the project during the June 2011 quarter with a view to test both the shallow (less than 500 metres) unmined areas of the Main Reef as well as potential Black Reef occurrences north of the current Modder East Operations. This exploration has continued during Assay results received during the year have defined potential higher grade channelised areas (payshoots) of Main Reef and isolated intersections of well mineralised Black Reef that appear to be more channelised than the Black Reef currently mined at Modder East. A preliminary structural geological model for the Main Reef has been completed and an initial target area been defined. Broader isolated Black Reef targets have also been defined. The exploration drilling will be used to estimate a mineral resource during the March 2013 quarter. This resource in turn will underpin a pre-feasibility study at the Modder North Project. TULO The Tulo exploration target comprises a shear hosted gold mineralisation target situated 20 kilometres south of Tanzania in the north-western part of Mozambique. A high resolution helicopter-borne geophysical survey of Tulo was completed during 2012 and identified a 20.5 kilometre magnetic lineament. Mapping, trenching and sampling of a prominent two kilometre quartz vein outcrop that forms the southern portion of the 20.5 kilometre magnetic lineament has been carried out and 47 trenches had been excavated by the end of December Of these trenches, 40 exposed quartz veining which was subsequently sampled. Assay results from the sampling are anticipated to be received and reviewed during the March 2013 quarter and will be used to define an exploration drill programme planned for NEW KLEINFONTEIN AND TURNBRIDGE Exploration for New Kleinfontein and Turnbridge focuses on the shallow portions (less than 500 metres below surface) of the properties where the Main Reef has previously been selectively mined. The primary exploration target at New Kleinfontein and Turnbridge is the shallow remnant (unmined) portions of the Main Reef. A mineral resource estimate was completed at the project during On the basis of the updated resources, a detailed scoping study has been completed at the project targeting only the indicated portions of the updated resource. Although the scoping study suggested positive results for the project, Gold One is currently evaluating both strategic and technical alternatives regarding the further development of this asset, particularly in light of the potential transaction with the joint provisional liquidators representing Pamodzi Gold East Rand and its subsidiaries. PAMODZI EAST RAND OPERATIONS On 17 April 2012 Gold One announced that the company had entered into an acquisition agreement through its subsidiaries New Kleinfontein Mining Company Limited and Goliath Gold to acquire prospecting rights over the areas covered by the mining rights held by The Grootvlei Proprietary Mines Limited, Consolidated Modderfontein Mines 1979 Limited and Nigel Gold Mining Company (Pty) Limited for a total of ZAR70 million. The prospecting applications have been formally accepted by the Department of Mineral Resources and it is expected that the approval process will be completed by 31 July

20 Directors Report The directors present their report on the consolidated entity consisting of Gold One and the entities it controlled for the year ended 31 December Directors The directors of Gold One at the date of this report are as follows: Director Date of Appointment Nationality Independence Christopher Chadwick 25 May 2009 South African Executive Yalei Sun 1 March 2012 Chinese Not independent Mike Solomon 1 March 2012 South African Independent Allan Liu 1 March 2012 Chinese Independent Robert Chan 1 March 2012 Chinese Independent Chao Zhou 1 March 2012 Chinese Not independent Neal Froneman was an executive director from the beginning of the year until his resignation on 31 December Mark Wheatley, Kenneth Winters, Barry Davison and Ming Liao were non-executive directors from the beginning of the year until their resignations on 30 December Kenneth Dicks, William Harris and Sandile Swana were non-executive directors from the beginning of the year until their resignations on 29 February

21 Directors' Report Yalei Sun Non-Executive Chairman Yalei is a director of the CITIC Group, assistant to the CEO of the CITIC Group and the vice-chairman and CEO of the CITIC Guoan Group. Yalei is also vice-chairman of Baiyin Nonferrous Group and is a graduate of the People s University of Industry and Economic Management. Yalei previously served as CEO and as vice-chairman of CITIC Guoan Information Industry Company. Christopher Chadwick CFO and Acting CEO - B.Compt (Hons), CTA, CA(SA) Christopher completed his articles at Deloitte and qualified as a chartered accountant in Christopher has held executive positions in a wide range of industries including the information technology and fast moving consumer goods industries, and has worked with both South African companies and multinationals. Christopher was appointed CFO of Aflease Gold in July Michael Solomon Non-Executive Director - BSc, MDP Michael has 31 years professional experience as a mining engineer in gold, platinum, diamonds and base metals and some 17 years experience as a consulting engineer with SRK Consulting, EL Bateman and The Mineral Corporation. From 1992 to 1994 Michael was a member of the African National Congress Minerals and Energy Group and after the 1994 elections he served as senior policy analyst and head of minerals policy with the Minerals and Energy Policy Centre. Michael was appointed CEO of Wesizwe Platinum in 2004 and retired in Allan Liu Non-Executive Director - MBA Robert Chan Non-Executive Director - MBA Robert is an experienced banker with over 39 years of experience in both commercial and investment banking having worked in London, Malaysia, and Singapore. Robert retired from the United Overseas Bank on 31 December 2011 after 35 years of service, 25 years of which he was CEO. Robert has served as independent non-executive director of Noble Group since He is also an independent non-executive director of Hutchison Port Holdings Trustees, the Trustee- Manager of Hutchison Port Holdings Trust, a business trust listed in Singapore, as well as Quam Limited which is listed in Hong Kong. He is currently chairman (non-executive director) of The Hour Glass (HK). Robert holds a bachelor of science (economics) honours degree and a master s degree in business administration. Robert is also a fellow of the Hong Kong Institute of Directors. Chao Zhou Non-Executive Director - MBA Chao has nearly 20 years experience in various areas including commodity trading, investment, and risk management and is the managing director and head of advisory services of the China-Africa Development Fund, which he helped establish in 2007, focusing on merger and acquisition transactions. Prior to joining the China-Africa Development Fund, Chao was a portfolio manager for the China Development Bank and was responsible for credit portfolio allocation and overall risk management. Chao also helped to develop the first credit default swap products for the China Development Bank and worked on the implementation of Basel II. Chao sits on the board of Tin-Can Island Container Terminal in Nigeria and holds a master in business administration degree from the University of New South Wales Australian Graduate School of Management. Allan is a managing partner of PAG Capital and has over 25 years experience in advising and executing investments in China, particularly in the consumer and retail sectors. Prior to working at PAG Capital, Allan worked with American International Group ( AIG ) from 1995 and was the president and co-founder of the China Retail Fund (co-sponsored by AIG). From 1981 Allan advised on entry strategies into China to many of the world s leading multinational companies such as Procter & Gamble, American Standard, Revlon and ProLogis, and has been instrumental in executing over US$2 billion in foreign direct investments. Allan s private equity investment experience started in 1991 where he was an adviser to the Blackstone Group for its China expansion strategy. In addition to sitting on the boards of several portfolio companies, Allan is also a founding board member and vice chairman of Beijing Private Equity Association. 19

22 2. Directors Meetings The number of meetings of directors (including committee meetings) held during the year and the number of meetings attended by each director while they were directors are as follows: Board Meetings Audit Remuneration Safety Governance C Chadwick 5/ Y Sun 1/ L Sun* 3/ M Solomon 4/4 2/2-4/4 2/2 A Liu 2/4-2/3 - - R Chan 4/4 2/ /2 C Zhou 3/ M Wheatley 5/5-3/3-2/2 K Winters 5/5 3/ N Froneman 5/ /4 - B Davison 5/5-3/3-2/2 K Dicks 1/ W Harris 1/1 1/ S Swana 1/1 1/ M Liao 3/ P Lee** 1/ * L Sun serves as alternate director for Y Sun. ** P Lee served as alternate director for M Liao. The constitution requires that any five directors be present at a board of directors meeting to form a quorum. 3. Company Secretaries Pierre Kruger BCom, LLB, H Dip Company Law Pierre was appointed the company secretary of Aflease Gold in January 2007 and company secretary of Gold One, based in South Africa, on 25 May Prior to his appointment as company secretary he served as a non-executive director on the Aflease Gold board. Pierre practised as an attorney, conveyancer and notary public for a period of 26 years prior to joining the group fulltime in January Kim Hogg BCom Kim was appointed as a company secretary of Gold One, based in Australia, on 15 Janaury 2013 and holds a bachelor of commerce degree from the University of Western Australia. Kim is a partner at Anthony Ho and Associates. 4. Principal Activities and Nature of Operations Gold One is an ASX and JSE listed mid-tier mining group with gold operations and gold and uranium prospects across Southern Africa, and is focused on developing and mining low technical risk, high margin precious metal resources in diversified mining friendly jurisdictions. Operations located in the West Rand, 30 kilometres from Johannesburg. During mid-2012 Gold One also completed a transaction with First Uranium and acquired the Ezulwini Mine, giving the company access to gold and uranium metallurgical processing plants with nameplate capacities of 200,000 and 100,000 tonnes per month, respectively. Ezulwini is contiguous to the company s Cooke 1-3 Underground and Randfontein Surface Operations and was historically known as the Cooke 4 Shaft. Access to Ezulwini s uranium production facility will allow for near term production of uranium from underground ore mined from the Cooke Shafts and the sharing of services between Ezulwini and the Cooke Underground Operations will facilitate a reduction in operating costs. An integrated plan incorporating Ezulwini into the greater Cooke Underground Operations is underway. These assets, together with Gold One s flagship Modder East gold mine located in Johannesburg s East Rand, produced 241,755 ounces for the 2012 year. This is compared to 123,179 ounces produced during 2011 and was achieved amid disruptive illegal industrial action that took place at the Modder East Operation during June 2012 and at Cooke 4 during October Gold One s operations are supported by a significant project pipeline comprising both gold and uranium resources in various stages of development, from feasibility and pre-feasibility studies to greenfield exploration projects across Southern Africa. At the beginning of 2012 the Gold One group expanded with the acquisition of Rand Uranium, consisting of the Cooke 1-3 Underground Operations and the Randfontein Surface 20

23 Directors' Report 5. Operating and Financial Review The Company Review commencing on pages 6 to 17 of this annual report provides the operating review of the group during the year and subsequent to the reporting date. Operating Results for the Period The results for the year ended 31 December have been characterised by impressive performance under challenging operating conditions in the South African mining environment. Modder East s gold production amounted to 97,958 ounces. Rand Uranium and Ezulwini, acquired during 2012, contributed a further 143,797 ounces of gold production. As a result of the increased gold production and higher achieved gold prices, revenue from gold sales increased from A$188,260 million in 2011 to A$381,633 million in The resulting gross profits have declined, however, to A$ million ( A$ million) as a result of the industry wide strike action and certain operational challenges at the Cooke Underground Operations. Noteworthy during the period was the broad-based black economic empowerment arrangements that were entered into, which resulted in a once-off non-cash charge of A$ million for the life of mine. These agreements were entered into in order to comply with the requirements set out in the South African Mining Charter. Further details are provided in note 31 to the financial statements. Included in profit for the year was a gain on bargain purchase amounting to A$ million, which the Gold One Group recorded as a result of the bargain purchase of Rand Uranium and Ezulwini. Of this gain A$5 million relates to the purchase of Ezulwini and is a provisional amount which will be finalised in Further details are provided in note 11 to the financial statements. Cash balances at the end of the year decreased to A$ million (2011 A$ million) primarily as a result of the funding of the acquisition of Rand Uranium on 1 January The higher shareholder and external debt funding used to acquire Ezulwini and Goliath Gold resulted in an increase in the finance costs to A$ million (2011 A$3.632 million). Headline earnings/loss for the period is the profit and/or loss per period adjusted for profits and/or losses attributable to once-off expenses and capital gains or losses. The disclosure of headline earnings/loss per share is a requirement of the JSE. Consolidated Headline (Loss)/Earnings per Share (A$) (0.03) 0.06 Calculated based on: Weighted average number of fully paid ordinary shares Headline (Loss)/Earnings for the Period (A$ 000) (43 835) Reconciliation of Basic and Headline (Loss)/Earnings for the Period (A$ 000) Profit/(loss) for the year Impairment of assets Gain on sale of assets Black economic empowerment transactions Gain on bargain purchase ( ) - Headline (Loss)/Earnings for the Year (43 835) Shares Issued During the Period Exercise of listed options (13,674 at A$0.50) Shares issued in respect of the Tulo acquisition (113,618 shares at ZAR4.40; 132,354 shares at ZAR3.78 non-cash) Exercise of unlisted options (2,899 shares at ZAR1.35; 47,101 shares at ZAR2.12; 29,000 shares at ZAR1.77; 1,067,000 shares at ZAR3.13) Issued in respect of a mandatory offer to Goliath Gold shareholders (1,012,750 shares at ZAR4.05). 6. Dividends No dividends were declared or paid to shareholders during the financial year ( A$ nil). 7. Significant Changes in the State of Affairs Other than the foregoing and as referred to in the Company Review on pages 6 to 17, there were no significant changes in the group s activities during the financial year. 21

24 8. Matters Subsequent to the End of the Financial Year In the opinion of the directors, no matter or circumstance has arisen since 31 December Likely Developments, Future Business Strategies and Prospects Comments on expected results of certain operations of the group are included in this annual report under the Company Review on pages 6 to 17. Further information about the likely developments in the operations of the group in future years and the expected results of those operations has been omitted from this Directors Report because disclosure of the information is, in the directors opinion, likely to result in unreasonable prejudice to the group. 10. Environmental Regulation and Performance The group s operations are not subject to any significant environmental regulations under either Commonwealth or state legislation, but are subject to numerous environmental regulations in South Africa, including the National Water Act (No. 36 of 1998), National Environment Management Act (No. 107 of 1998), National Nuclear Regulator Act (No. 47 of 1999), Waste Act (No. 59 of 2008) and Air Quality Act (No. 39 of 2004). The board believes that the group has adequate systems in place for the management of environmental regulations and is not aware of any breach of those environmental requirements as they apply to the group. 11. Directors Interests To date, the interests of the directors in the shares of the company and related bodies corporate are: Number Indirectly Director Number Directly Held Held Christopher Chadwick Unlisted options (Gold One)* Unlisted options (Goliath Gold)** *All options in Gold One have vested and are exercisable as at the date of this report. **No options in Goliath Gold have vested as at the date of this report. 12. Share Options Granted to Directors and Executives No options over unissued ordinary shares of Gold One were granted during or since the end of the financial year to directors and executives of the group. The following options over ordinary shares in Goliath Gold were granted during the year: NAME Grant Date Expiry Date Strike Price Number Mark Wheatley 13/12/ /12/2017 ZAR Christopher Chadwick 13/12/ /12/2017 ZAR Pierre Kruger 13/12/ /12/2017 ZAR Richard Stewart 13/12/ /12/2017 ZAR Unissued Shares As at 31 December 2012, there were 41,169,326 unlisted share options outstanding, that, if exercised, would result in the issue of 41,169,326 new shares in Gold One. Refer to note 39 of the financial statements for further details of the options outstanding. Option holders do not have any right by virtue of the option to participate in any share issue of the company, unless the option holder exercises that option and becomes the holder of Gold One shares prior to the record date for the issue of the shares. Shares Issued as a Result of the Exercise of Options The following ordinary shares in Gold One were issued during the year 31 December 2012 on the exercise of options. No further shares have been issued since that date. No amounts are unpaid on any of the shares. Grant Date Currency Ex Price Total 12/10/2007 A$ /11/2007 ZAR /12/2008 ZAR /12/2009 ZAR

25 Directors' Report Grant Date Currency Ex Price Total 12/07/2010 ZAR Grand Total Insurance and Indemnities of Directors and Officers During the financial year the group paid a premium of A$81,112 (2011: A$65,278) to insure the directors and secretaries of the company and its controlled entities and the general managers of each of its divisions. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for them, or someone else, or to cause detriment to the company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities. Directors may obtain independent professional advice at the expense of the company. Under the Gold One Constitution the company, to the extent permitted by the Corporations Act 2001 (Cth), Trade Practices Act 1974 (Cth) and any other applicable law, indemnifies every officer of the company and its wholly owned subsidiaries and may indemnify its auditor against a liability incurred as such an officer or auditor, unless the liability arises out of conduct involving a lack of good faith. The company may make a payment in respect of legal costs incurred by an officer or employee or auditor in defending an action for a liability incurred as such an officer, employee or auditor, or in resisting or responding to actions taken by a government agency or a liquidator. 14. Proceedings on Behalf of the Company No person has applied to the court under section 237 of the Corporations Act 2001 (Cth) for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party, for the purpose of taking responsibility on behalf of the company for all or part of those proceedings. 15. Remuneration Report This remuneration report sets out the remuneration arrangements in place for directors and executives of the group in accordance with the requirements of the Corporations Act 2001 (Cth) and its regulations. Directors and key management personnel disclosed in this report: Name Position Non-Executive and Executive Directors see pages 18 to 20 above W Robinson Executive Vice President: South African Operations I Marais Executive Vice President: Modder East Operations R Stewart Executive Vice President: Technical Services P Kruger Group Company Secretary R Plaistowe Senior Vice President: Surface Operations During the year Wayne Robinson was appointed to the position of executive vice president: South African operations, Neal Froneman resigned as CEO and Sydney Caddy resigned as senior vice president: operations. The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporation Act 2001 (Cth). Principles Used to Determine the Amount and Nature of Remuneration The performance of the company depends upon the calibre of its directors and executives. The following principles are included in its remuneration framework to ensure maximum stakeholder benefits. Provide competitive remuneration packages to attract and retain high calibre executives Have a portion of executive remuneration at risk, dependent upon meeting pre-determined service periods and performance benchmarks Periodically reassess the appropriateness of the nature and amount of executive emoluments by reference to relevant employment market conditions Transparency Capital management. In consultation with external remuneration consultants the group has structured an executive remuneration framework that is market competitive, complementary to the reward strategy of the organisation, and aligned to shareholder s and executive s interests. Principles of alignment to shareholders interests: Has economic profit as a core component of plan design Focuses on sustained growth in shareholder wealth, consisting of dividends and growth in share price and delivering constant return on assets as well as focusing the executive on key non-financial drivers of value Attracts and retains high calibre executives. 23

26 Principles of alignment to executive s interests: Rewards capability and experience Reflects competitive reward for contribution to growth in shareholder wealth Provides a clear structure for earning rewards Provides recognition for contribution. The framework provides a mix of fixed and variable pay and a blend of short and long term incentives. As executives gain seniority within the group, the balance of this mix shifts to a higher proportion of at risk rewards. Non-Executive Directors Fees The following fee structures applied during the financial year: From 1 January to 29 February 2012 directors were entitled to a maximum annual fee, outlined below, which included a meeting fee of A$7,500 for each quarterly board meeting. The meeting fee was deducted for each meeting not attended. From 1 Jan to 29 Feb 2012 Title (A$) Non-Executive Chairman of the Board Audit Committee Chairman Non-Executive Directors From 1 March 2012, following the reconstitution of the Gold One board, the annual fee structure was changed to reflect the expanded size of the board and business and to take into account the additional demands on directors. From 1 Mar 2012 Title (A$) Non-Executive Chairman of the Board Lead Independent Director Non-executive Directors Additional Fees Audit Committee Chair Other Committee Chair Meeting Fee Board Meeting Fee Operational Review* Meeting Fee Ad Hoc Meeting Fee Committee Travel Fee (for travel in excess of six hours) * Applicable to independent non-executive directors only. Role of the Remuneration Committee The Remuneration Committee is a committee of the board. It is primarily responsible for making recommendations to the board on: Non-executive director fees Remuneration levels of executive directors and other key management personnel The over-arching executive remuneration framework and the operation of the incentive plan Key performance indicators and performance hurdles for the executive team. The committee s objective is to ensure that remuneration policies and structures are fair and competitive and are aligned with the long-term interests of the company. In doing this, the Remuneration Committee seeks advice from independent remuneration consultants. The Corporate Governance Statement provides further information on the role of this committee. Remuneration Structure In accordance with best practice corporate governance, the structure of non-executive directors and executive remuneration is separate and distinct. Non-Executive Director Remuneration Structure Fees and payments to non-executive directors reflect the demands that are made on and the responsibilities of the directors. The constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by Gold One s shareholders in general meetings. An amount, not exceeding the amount determined, is then divided between the directors as agreed. The latest determination was at a general meeting of shareholders held on 23 May 2012, where shareholders approved an aggregate remuneration of A$1,000,000 per year to reflect the expanded size of the Gold One Board and the need to remunerate a greater number of directors. The board seeks to set aggregate remuneration at a level that provides the company with the ability to attract and retain directors of high calibre while incurring a cost that is acceptable to shareholders. The amount of aggregate remuneration approved by shareholders and the manner in which it is apportioned among directors is reviewed annually. The board considers advice from external consultants as well as the fees paid to non-executive directors of comparable companies when undertaking the annual review process. 24

27 Directors' Report Executive Remuneration Objective The group aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the group, so as to: Reward executives for group and individual performance against targets set by reference to appropriate benchmarks Align the interest of executives with those of shareholders Ensure that total remuneration is competitive by market standards. Structure Remuneration for executives is structured at a level that is market competitive and consistent with best industry practice as well as supportive of the interests of shareholders, and has the following components: Base pay and benefits Short term performance incentives Long term performance incentives through participation in employee option plans. Base pay is structured as a total employment cost package that may be delivered as a combination of cash and prescribed non-financial benefits at the executive s discretion. Base pay for executives is reviewed annually to ensure that executives pay is competitive with the market. An executive s pay is also reviewed on promotion. There is no guaranteed base pay increase included in any executive s contract. Each executive has a short-term incentive opportunity depending on the accountabilities of their role and impact on group performance. The maximum target bonus opportunity is 60% of base pay for the CEO and 50% of base pay for the CFO and executive and senior vice presidents. For the year under review the key performance indicators were based on financial, mining, safety and corporate development areas and were set individually across the executive team. The performance objectives were set having regard to the current development of the company and have changed as the company has moved from being a single operation to a multi mine production company. The board currently attaches significant weight to the safety of operations, the attainment of development and production targets at the mining operations and the profitability of the group and performance objectives are weighted accordingly. The Remuneration Committee is responsible for determining whether performance objectives have been met. The committee receives detailed information from management and external consultants to assist in making this assessment. Short term incentive payments may be adjusted in line with under or over achievement against the target performance levels. This is at the discretion of the committee. Long term incentives have in the past been provided to the executives via the Gold One International Limited Share Incentive Scheme, approved by the shareholders on 26 August The Scheme sets the maximum number of options that may be granted to any one executive as well as the terms and conditions upon which options may be granted. The Scheme further provides that, upon termination of employment, all unvested options immediately lapse. Vested options must be exercised within 180 days of termination of employment, failing which they lapse. Options granted to executive directors are only done so with the consent of shareholders obtained in general meeting and on such terms as may be approved by the shareholders. The number of options to be granted to any one employee is determined by the board on recommendation from the Remuneration Committee. Details of the nature and amount of each element of the emolument of each director of the company and each key management person of the company for the financial year follow below. Share trading policy The trading of shares issued to participants under any of the company s employee equity plans is subject to, and conditional upon, compliance with the company s employee share trading policy. Use of remuneration consultants In February 2012, Gold One s Remuneration Committee employed the services of McDonald & Company (Australasia) Pty Limited ( McDonald ) to review its existing remuneration policies and provide recommendations in respect of both executive and non-executive short term and long term incentive plan design. These recommendations also covered the group s key management personnel. Under the terms of the engagement, McDonald provided remuneration recommendations as defined in section 9B of the Corporations Act 2001 (Cth) and was paid A$16,250 for these services. McDonald has confirmed that the above recommendations have been made free from undue influence from members of the group s key management personnel. The following arrangements were made to ensure that the remuneration recommendations were free from undue influence: McDonald was engaged by, and reported directly to, the lead independent director. The agreement for the provision of remuneration consulting services was executed by the lead independent director under delegated authority on behalf of the board. The report containing the remuneration recommendations was provided by McDonald directly to the lead independent director 25

28 McDonald was permitted to speak to management throughout the engagement to understand company processes, practices and other business issues and to obtain management perspectives McDonald was not permitted to provide any member of management with a copy of its draft or final report that contained remuneration recommendations. As a consequence, the board is satisfied that the recommendations were made free from undue influence from any of the key management personnel. Voting and comments made at the company s 2012 Annual General Meeting Gold One received more than 99% of yes votes on its remuneration report for the 2011 financial year. The company did not receive any specific feedback on its remuneration process at the annual general meeting or throughout the year. Table 1: Directors and Executives Remuneration for the Year Ended 31 December 2012 Name Executive Directors N Froneman: CEO (resigned 31 December 2012) C Chadwick: CFO Subtotal Executive Directors Performance Bonus* Retention Bonus Post Employment Super- Annuation Options^ Total A$ A$ A$ A$ A$ A$ Short Term Salary and/ or Fees Share Based Payments: EquitY * * Non-Executive Directors M Wheatley** (resigned 30 December 2012) B Davison (resigned 30 December 2012) K Dicks (resigned 29 February 2012) W Harris (resigned 29 February 2012) S Swana (resigned 29 February 2012) K Winters (resigned 30 December 2012) M Solomon (appointed 1 March 2012) A Liu (appointed 1 March 2012) R Chan (appointed 1 March 2012)

29 Directors' Report Post Employment Super- Share Based Payments: EquitY Short Term Salary and/ or Fees Performance Bonus* Retention Bonus Annuation Options^ Total Name A$ A$ A$ A$ A$ A$ Y Sun (appointed 1 March )*** # M Liao (appointed 1 March , resigned 30 December 2012)*** # C Zhou (appointed 1 March ) # Subtotal Non-Executive Directors Other Key Management Personnel W Robinson: EVP: South African Operations (commenced 1 May 2012) I Marais: EVP: Modder East Operations R Stewart: EVP: Technical Services P Kruger: Group Company Secretary R Plaistowe: SVP: Surface Operations S Caddy (resigned 5 October 2012) Subtotal Other Key Management Personnel * * * * Total Directors and Executives Remuneration * The amount listed for 2011 includes a cash bonus amount paid in 2011 in respect of the 2010 financial year and an accrual for bonuses in respect of the 2011 year, but which were only paid in The company has not been able to determine with certainty that performance bonuses will be paid for the 2012 year and as a consequence it is not able to accrue for same in ** The short term salary and fees amount for Mark Wheatley includes an amount of A$20,624, which relates to his directorship of Goliath Gold; a controlled subsidiary of Gold One. *** In cases where a director has appointed an alternate director, under the company s constitution alternate directors are entitled to be reimbursed for reasonable expenses only and do not attract any fees for their services. # Fees earned in respect of directors appointed by BCX Gold are paid to BCX Gold on the directors behalf. ^ The 2012 share based payments amount reflects the amount expensed as share options issued by Goliath Gold. No other remuneration was paid by Goliath Gold to key management personnel other than to Mark Wheatley as listed above. 27

30 The relative proportions of remuneration that are linked to performance and those that are fixed for the group are as follows: At Risk Fixed Remuneration Short Term Incentive Long Term Incentive Name 2012 % 2011 % 2012 % 2011 % 2012 % 2011 % Executive Directors N Froneman 57% 28% 43% 51% - 21% C Chadwick 68% 32% 32% 46% - 22% Non-Executive Directors M Wheatley 100% 58% % B Davison 100% 28% % K Winters 100% 34% % M Solomon 100% A Liu 100% R Chan 100% Y Sun 100% M Liao 100% C Zhou 100% Key Management Personnel W Robinson 100% I Marais 68% 38% 32% 43% - 19% R Stewart 68% 28% 32% 39% - 33% P Kruger 66% 41% 34% 51% - 8% R Plaistowe 100% S Caddy 69% 37% 31% 50% - 13% Service Agreements Remuneration and other terms of employment for the CEO, CFO and other key management personnel are also formalised in service agreements. Each of these agreements provides for the provision of performance related cash bonuses and, when eligible, participation in the Gold One Employee Incentive Scheme. Other major provisions of the agreements relating to remuneration are set out below. All contracts with current directors and key management personnel may be terminated early by either party with three months notice subject to a benefit on termination by the company, which entitles the terminated party to 20% of base salary for the period worked during the fiscal year and one-and-a-half year s annual salary. Name Term of Agreement Base salary ZAR/A$ Retention Bonus* ZAR/A$ C Chadwick** Open ended commencing 25 May / / W Robinson Open ended commencing 1 May / I Marais** Open ended commencing 25 May / / R Stewart** Open ended commencing 1 Nov / / P Kruger** Open ended commencing 1 Nov / / R Plaistowe Open ended commencing 22 Aug / * Retention bonus instalment payable on 30 December 2013 pursuant to the transaction implementation agreement between Gold One and BCX Gold, dated 16 May Shareholders approved the payment of retention bonuses in the case of Christopher Chadwick on 7 September ** The balance of share options held at 31 December 2011 ( restricted executive options ) are subject to clause 4 of schedule 7 of the transaction implementation agreement whereby the company has requested that the executives do not sell any shares resulting from the exercise of any restricted executive options for a period of two years reckoned from 30 December After the conclusion of the two year period BCX Gold is obliged to offer to purchase the restricted executive options or shares at the offer price of A$

31 Directors' Report Shareholdings of Executives and Key Management Personnel The movement in shareholding of executives and key management throughout the year is detailed below: Name Balance 1 Jan 2012 Shares Acquired on Open Market On Exercise of Options Resigned/ Retired Balance 31 Dec 2012 I Marais P Kruger N Froneman ( ) - M Wheatley ( ) - B Davison ( ) - K Dicks ( ) - S Swana (50 000) - K Winters ( ) - Name Balance 1 Jan 2011 Shares Acquired on Open Market On Exercise of Options Sold Balance 31 Dec 2011 C Chadwick ( ) - I Marais ( ) R Stewart ( ) - P Kruger ( ) N Froneman ( ) M Wheatley ( ) B Davison ( ) K Dicks ( ) W Harris ( ) - S Swana ( ) K Winters ( ) S Caddy ( ) - Table 3: Options Holdings of Key Management Personnel Details of options over ordinary shares in the company provided as remuneration to each director of Gold One and key management personnel of the group are set out below. When exercisable, each option converts into one ordinary share of Gold One. Further information on the options is set out in note 39 of the financial statements. Vested Name Balance 1 Jan 2012 Exercised Resigned/ Expired Balance 31 Dec C Chadwick I Marais ( ) R Stewart P Kruger N Froneman ( ) M Wheatley ( ) K Winters ( ) S Caddy ( )

32 All options vested at 31 December Vested Name Balance 1 Jan 2011 Exercised Expired Balance 31 Dec C Chadwick ( ) I Marais ( ) R Stewart ( ) P Kruger ( ) N Froneman ( ) M Wheatley ( ) ( ) B Davison ( ) K Dicks ( ) W Harris ( ) S Swana ( ) K Winters ( ) S Caddy ( ) Key management personnel options that were exercised during the year: Name Date of Grant Date of Exercise Exercise Price Number Exercised I Marais 12/11/ /11/2012 ZAR The assessed fair value of options granted at the grant date to the individuals is allocated equally over the period from grant date to vesting date, and the amount is included in the remunerations tables above. Fair values at grant date are independently determined using a modified binomial model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and the expected price volatility of the underlying share, the expected dividend yield, and the risk-free interest rate for the term of the option. Details of Remuneration: Cash Bonuses and Options For each cash bonus and grant of options included in the tables contained above and within note 39 of the notes to the annual financial statements, the percentage of the available bonus or grant that was paid or that vested in the financial year, and the percentage that was forfeited because the person did not meet the service and performance criteria, are set out below. No part of the bonuses is payable in future years. At the time of grant, options vest after three years provided the vesting conditions are met and no options will vest if the conditions are not satisfied; hence the minimum value of the option yet to vest is nil. The maximum value of the options yet to vest has been determined as the amount of the grant date fair value of the options that is yet to be expensed. This amount, however, is nil as there were no unvested options as a result of the takeover offer by a consortium of Chinese investors that was lodged with the ASX on 3 August At that time the remaining fair value of the grant yet to vest was recognised as an expense in the Statement of Comprehensive Income. Cash Bonus * Options Paid Forfeited Balance of Options Granted at 31 Dec 2012 Vested Forfeited Years in Which Options May Vest Min Value of Grant Yet to Vest Max Value of Grant Yet to Vest Name % % % % A$ A$ C Chadwick - 100% Nil Nil W Robinson - 100% Nil Nil I Marais - 100% Nil Nil R Stewart - 100% Nil Nil R Plaistowe - 100% Nil Nil P Kruger - 100% Nil Nil * The company has not been able to determine with certainty that performance bonuses will be paid for the 2012 year and as a consequence it is not able to accrue for same in

33 Directors' Report Shares Under Option Unissued ordinary shares of Gold One under option at the end of the year are detailed in note 39 of the notes to the annual financial statements. Grant Date Expiry Date Currency Strike Price Balance 1 Jan 2012 Granted Exercised Forfeited Expired Balance 31 Dec /10/ /10/2012 A$ (12 174) - ( ) - 12/11/ /11/2012 ZAR ( ) /03/ /03/2013 A$ /03/ /03/2013 A$ /06/ /06/2013 ZAR /06/ /06/2013 ZAR /07/ /07/2013 A$ /08/2008 1/08/2013 ZAR /12/ /12/2013 ZAR (2 899) /01/ /01/2014 A$ /02/ /02/2014 ZAR /10/2009 6/10/2014 ZAR /12/ /12/2014 ZAR (47 101) /01/ /01/2015 ZAR /03/2010 5/03/2015 ZAR /05/ /05/2015 A$ /05/ /05/2015 ZAR /07/ /07/2015 ZAR (29 000) /09/2010 3/09/2015 ZAR /11/ /11/2015 ZAR /02/ /02/2017 A$ /02/ /02/2017 ZAR ( ) /05/ /05/2017 ZAR ( ) /09/2012 6/09/2017 ZAR Total ( ) ( ) ( ) Corporate Information The Financial Report for Gold One for the year ended 31 December 2012 was authorised for issue in accordance with a resolution of the directors on 27 February Gold One is a company limited by shares that is incorporated and domiciled in Australia and which shares are publicly traded on the ASX and the JSE. Gold One has prepared a consolidated Financial Report incorporating the entities that it controlled during the financial year. The nature of the operations and principal activities of the group are described in this Directors Report. 17. Employees The group employed 6,420 employees as at 31 December 2012 (2011: 1,824 employees). 18. Auditor s Independence Declaration A copy of the auditor s independence declaration as required under section 307C of the Corporations Act 2001 (Cth) is set out on pages 34 and

34 19. Non-Audit Services The company may decide to employ the auditor on assignments additional to its statutory audit duties where the auditor s expertise and experience with the company and/or the group are important. Details of the amounts paid or payable to the auditors (PricewaterhouseCoopers) for audit and non-audit services provided during the year are set in note 8 of the notes to the annual financial statements. The board of directors has considered the position and, in accordance with advice received from the Audit Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 (Cth). The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor s independence requirements of the Corporations Act 2001 (Cth) for the following reasons: All non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality and objectivity of the auditor None of the services undermines the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. During the year the following fees were paid or payable for non-audit services provided by the auditor of the parent entity and its related practices: 2012 A$ 2011 A$ Tax compliance services Other services Rounding of Amounts 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 Directors Report and Financial Report. Amounts in the Directors Report and Financial Report have been rounded off to the nearest thousand dollars in accordance with the Class Order or, in certain cases, the nearest dollar. 21. Auditor PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001 (Cth). The report is made in accordance with a resolution of directors. The Financial Report set out on pages 44 to 105, which has been prepared on the going concern basis, was approved by the board on 27 February 2013 and signed on its behalf by: Christopher Chadwick (CFO and acting CEO) 27 February 2013 Johannesburg, South Africa 32

35 Directors' Report 33

36 34 Auditor s Independence Declaration

37 Auditor's Independence Declaration 35

38 Corporate Governance Statement Preamble Gold One and the board are committed to achieving and demonstrating the highest standards of corporate governance. The company and its controlled entities are jointly referred to as the group in this statement. A description of the group s main corporate governance practices is set out below. They comply, unless the contrary is stated, with the March 2010 ASX Principles of Good Corporate Governance and Best Practice Recommendations. There were material changes in the composition of the board, as will more fully appear hereunder, and this Corporate Governance Statement should be read against this background. On 16 May 2011 the company announced that it had entered into a transaction implementation agreement ( TIA ) with a consortium of investors ( the Jintu Transaction ). On 30 December 2011 Gold One successfully concluded the Jintu Transaction, introducing the BCX Consortium as the company s new majority shareholder holding 89.17% of the share capital. The TIA provides for the initial constitution of the board during the 12 months immediately following the completion of the Jintu Transaction, namely 31 December 2011 to 30 December 2012 ( the transition period ). Notwithstanding the above, it was agreed that the board as constituted on 30 December 2011 would remain in office until 28 February 2012 to enable it, inter alia, to approve the annual financial statements for the period ended 31 December 2011 and that the board would be reconstituted in accordance with the TIA with effect from 1 March The TIA provided that during the transition period the board would consist of 11 persons, namely: A CEO, being the CEO as at 16 May 2011 A CFO, being the CFO as at 16 May 2011 A lead independent director, being one of the independent directors on the board as at 16 May 2011 Five independent directors comprising two of the directors on the board as at 16 May 2011, and three independent directors nominated by the BCX Consortium Three non-executive nominee directors appointed by the BCX Consortium, one of whom would be the chairman. The TIA further provided that, following the transition period, the BCX Consortium may reconstitute the board in accordance with the following principles: Representation of the BCX Consortium will be in proportion with the latter s total shareholding in the company Size, which will be suitable for the board to perform its duties and function Composition, which will incorporate an appropriate mix of experience and qualifications of the board members and have regard to the relevant corporate governance considerations, including the ASX Corporate Governance Principles and Recommendations Independence, which will require a lead independent director and at least four independent non-executive directors. 36

39 Corporate Governance Statement Principle 1 Lay Solid Foundations for Management and Oversight The relationship between the board and senior management is critical to the group s long term success. The directors are responsible to the shareholders for the performance of the group in both the short and the long term, and seek to balance sometimes competing objectives in the best interests of the group as a whole. Their focus is to enhance the interests of shareholders and other key stakeholders and to ensure that the group is properly managed. The responsibilities of the board include: Providing strategic guidance to the group, including approving the corporate strategy Reviewing and approving business plans, the annual budget, and financial plans, including available resources and major capital expenditure initiatives Overseeing and monitoring: Organisational performance and the achievement of the group s strategic goals and objectives Progress of major capital expenditures and other significant corporate projects, including any acquisitions or divestments Monitoring financial performance, including approval of the annual and half-year financial reports and liaising with the company s auditors Effecting the appointment, performance assessment and, if necessary, removal of the CEO Ratifying the appointment and/or removal of and contributing to the performance assessments for members of the senior management team, including the CFO and the company secretary Ensuring that effective management processes are in place and approving major corporate initiatives Enhancing and protecting the reputation of the organisation Overseeing the operation of the group s system for compliance and risk management reporting to shareholders Ensuring appropriate resources are available to senior management. Day to day management of the group s affairs and the implementation of the corporate strategy and policy initiatives are formally delegated by the board to the CEO and senior executives as set out in the group s delegations policy. These delegations are reviewed on an annual basis. Principle 2 Structure the Board to Add Value The board operates in accordance with the broad principles set out in its charter. The charter details the board s composition and responsibilities. Board Composition The board is to be comprised of both executive and non-executive directors with a majority of non-executive directors. Non-executive directors bring a fresh perspective to the board s consideration of strategic, risk and performance matters. In recognition of the importance of independent views and the board s role in supervising the activities of management, the chairman should be an independent non-executive director, the majority of the board must be independent of management, and all directors are required to exercise independent judgment and review and constructively challenge the performance of management. The chairman is elected by the full board and is required to meet regularly with the CEO. The company is to maintain a mix of directors on the board from different backgrounds with complementary skills and experience. The board is required to undertake an annual board performance review and to consider the appropriate mix of skills required by the board to maximise its effectiveness and its contribution to the group. The board seeks to ensure that: At any point in time, its membership represents an appropriate balance and diversity between directors with experience and knowledge of the group and directors with an external or fresh perspective The size of the board is conducive to effective discussion and efficient decision making. Directors Independence The board has adopted specific principles in relation to directors independence. These state that when determining independence, a director must be a non-executive and the board should consider whether the director: Is a substantial shareholder of the company or an officer of, or otherwise associated directly with, a substantial shareholder of the company Is or has been employed in an executive capacity by the company or any other group member within three years before commencing to serve on the board Within the last three years has been a principal of a material professional advisor or a material consultant to the company or any other group member, or an employee materially associated with the service provided 37

40 Is a material supplier or customer of the company or any other group member or an officer of, or otherwise associated directly or indirectly with, a material supplier or customer Has a material contractual relationship with the company or a controlled entity other than as a director of the group Is free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with the director s independent exercise of their judgment. Materiality for these purposes is determined on both quantitative and qualitative bases. An amount of over 5% of annual turnover of the company or group or 5% of the individual director s net worth is considered material for these purposes. In addition a transaction of any amount, or a relationship, is deemed material if knowledge of it may impact the shareholder s understanding of the director s performance. Recent thinking on corporate governance has introduced the view that a director s independence may be perceived to be impacted by lengthy service on the board. The board will continue to monitor developments on this issue. The board assesses independence each year. To enable this process, the directors must provide all information that may be relevant to the assessment. An independence assessment was undertaken in 2011 following the conclusion of the TIA to assess the independence status of the directors who would take office during the transition period. The board concluded in its assessment that: Yalei Sun, Ming Liao and Chao Zhou were not independent by reason of the fact that they are officers of, or otherwise associated directly with, a substantial shareholder of the company Mark Wheatley, Kenneth Winters, Barry Davison, Michael Solomon, Allan Liu and Robert Chan met the requirements for independence. In assessing each director s independence, due regard was given to the grant of share options to non-executive directors approved by shareholders in In 2010 the board was of the opinion that share options were an appropriate means of remuneration and did not impact on the independence of the non-executive directors. The board remains of the opinion that the number and value of the share options granted in 2010 does not impact on the independence of non-executive directors. On the expiry of the transition period on 30 December 2012 the BCX Consortium gave notice of the reconstitution of the board. With effect from 30 December 2012 the board has been streamlined to seven members of whom four are independent directors. The board will conduct an independence evaluation in 2013 to ensure that the majority of the directors are independent. Board Members Details of the members of the board, their experience, expertise, qualifications, terms of office, relationships affecting their independence and their independent status are set out in the Directors Report. At the date of signing the Directors Report there was one executive director and five non-executive directors. A further independent non-executive director will be appointed shortly. Term of Office The company s constitution specifies that, save for the managing director, all elected directors must retire from office no later than the third annual general meeting following their last election. The board may appoint a person to be a director at any time except during a general meeting. Any director so appointed automatically retires at the annual general meeting immediately following his appointment. Where eligible, a director may stand for re-election. Chairman and CEO The chairman is responsible for leading the board, ensuring directors are properly briefed in all matters relevant to their role and responsibilities, facilitating board discussions and managing the board s relationship with the company s senior executives. In accepting the position the chairman acknowledges that it will require a significant time commitment and has confirmed that other positions will not hinder his effective performance in the role of chairman. The CEO is responsible for implementing group strategies and policies. The Gold One Board Charter specifies that the roles of chairman and CEO are separate roles to be undertaken by separate people and that the chairman should be independent. The chairman, Yalei Sun, is not regarded as being independent by reason of the fact that he is associated directly with a substantial shareholder and, as a consequence, Mark Wheatley was appointed lead independent director during the transition period. Following the reconstitution of the board on 30 December 2012, Mark Wheatley retired as a director and as such it will be necessary for the board to appoint a new lead independent director from its ranks. Induction The induction provided to new directors and senior managers enables them to actively participate in board decision making as soon as possible. It ensures that they have a full understanding of the company s culture, financial position, strategies, operations and risk management policies. It also explains the respective rights, duties, responsibilities and roles 38

41 Corporate Governance Statement of the board and senior executives as well as the arrangements for meetings. Commitment The board held four board meetings during the year. Board meetings held in South Africa are usually held over a period of two to three days and include visits to the operations with full reviews of the various operations. The number of meetings of the company s board of directors and of each board committee held during the period ended 31 December 2012, and the number of meetings attended by each director, are disclosed on page 20. It is the company s practice to allow its executive directors to accept appointments outside the Gold One Group of companies with prior written approval from the board. No appointments of this nature were accepted during the year to 31 December The commitments of non-executive directors are considered by the Governance and Nomination Committee prior to the directors appointments to the board of the company and are reviewed from time to time. Prior to appointment or being submitted for re-election each non-executive director is required to specifically acknowledge that they have, and will continue to have, the time available to discharge their responsibilities to the company. Independent Professional Advice Directors and board committees have the right, in connection with their duties and responsibilities, to seek independent professional advice at the company s expense. Prior written approval from the chairman is required but this will not be unreasonably withheld. Conflict of Interests In accordance with the board charter, directors are requested to declare any conflict of interest and are precluded from taking part in any discussions on decisions in connection therewith. In addition, no board papers relating to the conflict of interest are distributed to the director concerned. Performance Assessment In terms of its charter the board is required to undertake an annual evaluation of the performance of the directors and its committees. No formal assessment was carried out for the year ended 31 December 2012 by reason of the fact that the board was reconstituted on 1 March 2012 and again on 30 December 2012, as is set out in the preamble to this statement. Board Committees The board has established a number of committees to assist in the execution of its duties and to allow detailed consideration of complex issues. Current committees of the board are the audit, governance, remuneration and health and safety committees. Save for the Health, Safety, Environment and Sustainable Development Committee on which an executive director is required to serve, all other committees are comprised entirely of non-executive directors, the majority of whom are independent. The committee structures and memberships are reviewed on an annual basis. A policy of rotation of committee members applies. Each committee has its own written charter setting out its role and responsibilities, composition, structure, membership requirements and the manner in which the committee is to operate. All of these charters are reviewed on an annual basis. Unless authority has been delegated to a committee by the board to determine a specific issue, all matters determined by committees are submitted to the full board as recommendations for board decisions. Minutes of committee meetings are tabled at the subsequent board meetings. Additional requirements for specific reporting by the committees to the board are addressed in the charters of the individual committees. With the reconstitution of the board on 30 December 2012, which resulted in the retirement of three independent non-executive directors, and coupled with the resignation of an executive director, it will be necessary for the board to review the composition of the committees during the March 2013 quarter. The composition of the committees set out below is as at the end of the transition period, namely 30 December Governance and Nomination Committee During the transition period the Governance and Nomination Committee consisted of the following non-executive directors, all of whom were regarded as being independent: Mark Wheatley (chairman) Robert Chan Michael Solomon Details of these directors attendance at committee meetings are set out in the Directors Report on page 20. The main responsibilities of the committee are to: Conduct an annual review of the membership of the board having regard to present and future needs of the company and to make recommendations on board composition and appointments Conduct an annual review of, and conclude on, the independence of each director Propose candidates for board vacancies Oversee the annual performance assessment programme 39

42 Oversee board succession, including the succession of the chairman Develop and review the board and committee charters Prepare committee reports that are required to be included in the company s annual report and circulars to shareholders. Acting on the recommendation of the Nominating Committee the full board may appoint a director at any time except at a general meeting. A director appointed by the board must stand for election at the next annual general meeting of the company. The committee s nomination of existing directors for reappointment is not automatic and is contingent on their past performance, contribution to the company and the current and future needs of the board and company. The board and the committee are also aware of the advantages of board renewal and succession planning. Notices of meetings for the election of directors comply with the ASX Corporate Governance Council s best practice recommendations. All new directors are required to participate in a comprehensive formal induction programme, which covers the operation of the board and its committees and financial, strategic, operational, regulatory and compliance issues. Health, Safety, Environment and Sustainable Development Committee During the transition period the Health, Safety, Environment and Sustainable Development Committee consisted of the following directors: Michael Solomon (chairman) Mark Wheatley Neal Froneman (executive) The main responsibilities of the committee are to: Oversee the development of policies, programmes and practices pertaining to the environment, occupational health and safety, and sustainable development matters Promote the empowerment of historically disadvantaged persons Monitor compliance with the South African Mining Charter. Company Secretaries The company has appointed two company secretaries, one of whom is ordinarily resident in Australia. They provide advice to the board in respect of corporate governance and the recommendations contained in the ASX Governance Principles. In addition to the company secretaries statutory and other duties, they provide the board as a whole, and committees and directors individually, with guidance as to the discharging of responsibilities in the best interests of the company. The company secretaries are responsible for the induction and training of all new appointments to the board according to a programme to familiarise them with the affairs and business of the group and the strategies of the board. The appointment and removal of a company secretary is a matter for the board as a whole. Principle 3 Promote Ethical and Responsible Decision Making Code of Conduct The company is in the process of developing a statement of values and a code of conduct ( the code ). The code will be regularly reviewed and updated as necessary to ensure it reflects the highest standards of behaviour and professionalism and the practices necessary to maintain confidence in the group s integrity, and to take into account legal obligations and reasonable expectations of the company s stakeholders. In summary, the code will require that at all times all company personnel act with the utmost integrity, objectivity and in compliance with the letter and the spirit of the law and company policies. The purchase and sale of company securities by directors and employees is not permitted during closed or prohibited periods. A director wishing to purchase or sell company securities is obliged to obtain the consent of the chairman in advance of the trade. A copy of the company s Securities Dealing Policy can be viewed on the company s website. The company s Securities Dealing Policy is discussed with each new director and employee as part of their induction training. The directors are satisfied that the group has complied with its policies on ethical standards, including dealing in securities. Diversity Policy The company recognises that a talented and diverse workforce at all levels of the company is a key competitive advantage and that experienced, skilled and diversified employees are an important contributor to the company s success. Gold One regards people as its most important asset. The board does not consider it appropriate at this stage for the company to implement a diversity policy consistent with the ASX Corporate Governance Principles, as the company is already required by South African law to comply with the diversity requirements stipulated under the Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry, published and implemented by the South African Department of Mineral Resources. All of the company s mining and exploration operations are located within Southern Africa. 40

43 Corporate Governance Statement The Mining Charter aims at facilitating the participation of historically disadvantaged South Africans ( HDSAs ) in the mining and minerals industry by providing specific targets, which must be met by 2014, to effect transformation and promote sustainable development and growth within the South African mining industry. HDSAs are defined as any person, category of persons, or community disadvantaged by unfair discrimination before the Constitution of the Republic of South Africa Act 200 of 1993 came into operation, on the basis of race, gender or disability and includes females generally as well as black, Indian and coloured people. Furthermore, under the Mining Charter, in furtherance of employment equity targets, a holder of a new order mining right must reach 40% HDSA representation at all levels of management and core skills including 10% women in mining by no later than Gold One has already achieved the target of 10% women in mining at its operations. Principle 4 Safeguard Integrity in Financial Reporting Audit Committee During the transition period the Audit Committee consisted of the following non-executive directors, all of whom were regarded as being independent: Kenneth Winters (chairman) Michael Solomon Robert Chan Details of these directors qualifications and attendance at Audit Committee meetings are set out in the Directors Report on pages 19 to 20. All members of the Audit Committee are financially literate and have an appropriate understanding of the mining industry. The Audit Committee operates in accordance with a charter, which is approved by the entire board. The main responsibilities of the committee are to: Review, assess and approve the annual full and concise reports, the half-year financial report and all other financial information published by the company or released to the market Assist the board in reviewing the effectiveness of the organisation s internal control environment covering: Effectiveness and efficiency of operations Reliability of financial reporting Compliance with applicable laws and regulations Determine the scope of the internal finance function and ensure that its resources are adequate and used effectively, as well as assess its performance Ratify the appointment and/or removal, and contribute to the performance assessment of, the CFO Oversee the effective operation of the risk management framework Recommend to the board the appointment, removal and remuneration of the external auditors, and review the terms of their engagement, the scope and quality of the audit, and assess performance Consider the independence and competence of the external auditor on an ongoing basis Review and approve the level of non-audit services provided by the external auditors and ensure it does not adversely impact on auditor independence Review and monitor related party transactions and assess their propriety Report to the board on matters relevant to the committee s role and responsibilities. In fulfilling its responsibilities, the Audit Committee: Receives regular reports from management and the external auditors Meets with the external auditors at least twice a year, or more frequently if necessary Reviews the processes the CEO and CFO have in place to support their certifications to the board Reviews any significant disagreements between the auditors and management, irrespective of whether they have been resolved Meets separately with the external auditors at least twice a year without the presence of management Provides the external auditors with a clear line of direct communication at any time to either the chairman of the Audit Committee or the chairman of the board. The Audit Committee has authority within the scope of its responsibilities to seek any information it requires from any employee or external party. External Auditors Company and Audit Committee policy is to appoint external auditors who clearly demonstrate quality and independence. The performance of the external auditor is reviewed annually and applications for tender of external audit services are requested as deemed appropriate, taking into consideration assessment of performance, existing value and tender costs. PricewaterhouseCoopers was appointed as the external auditor at the 2012 annual general meeting. It is PricewaterhouseCoopers policy to rotate audit engagement partners on listed companies at least every five years. An analysis of fees paid to the external auditors, including a break-down of fees for non-audit services, is provided in the Financial Report. It is the policy of the external auditors to provide an annual declaration of their independence to the Audit Committee. The external auditor is required to attend the annual general meeting and be available to answer shareholder questions 41

44 about the conduct of the audit and the preparation and content of the audit report. Principles 5 and 6 Make Timely and Balanced Disclosures and Respect the Rights of Shareholders Continuous Disclosure and Shareholder Communication The company has developed written policies and procedures on information disclosure that focus on continuous disclosure of any information concerning the group that a reasonable person would expect to have a material effect on the price of the company s securities. These policies and procedures include the arrangements the company has in place to promote communication with shareholders and encourage effective participation at general meetings. The company secretaries have been nominated as the persons responsible for communications with both the ASX and the JSE. This role includes responsibility for ensuring compliance with the continuous disclosure requirements in the ASX Listing Rules and overseeing and coordinating information disclosure to the ASX, JSE, analysts, brokers, shareholders, the media and the public. All information disclosed to the exchanges is posted on the company s website as soon as it is disclosed. When analysts are briefed on aspects of the group s operations, the material used in the presentation is released to the exchanges and posted on the company s website. Procedures have also been established for reviewing whether any price sensitive information has been inadvertently disclosed and, if so, this information is also immediately released to the market. All shareholders may elect to receive a copy of the company s annual (full or concise) and half-yearly reports. In addition, the company seeks to provide opportunities for shareholders to participate through electronic means. Recent initiatives to facilitate this include making all company announcements, media briefings, details of company meetings, media releases for prior years and historical financial reports available on the company s website. The website also enables users to register their address for direct updates on company matters. Principle 7 Recognise and Manage Risk The board is responsible for satisfying itself annually, or more frequently as required, that management has developed and implemented a sound system of risk management and internal control. Detailed work on this task is delegated to the Audit Committee and reviewed by the whole board. The Audit Committee is responsible for ensuring there are adequate policies in relation to risk management by overseeing management s actions in the evaluation, management, monitoring and reporting of material operational, financial, compliance and strategic risks. In providing this oversight, the committee: Reviews the framework and methodology for risk identification, the degree of risk the company is willing to accept, the management of risk, and the processes for auditing and evaluating the company s risk management system Reviews group wide objectives in the context of the abovementioned categories of corporate risk Reviews and, where necessary, approves guidelines and policies governing the identification, assessment and management of the company s exposure to risk Reviews and approves the delegation of financial authorities and addresses any need to update these authorities on an annual basis Reviews compliance with agreed policies. The committee recommends any actions it deems appropriate to the board for its consideration. Management is responsible for designing, implementing, and reporting on the adequacy of the company s risk management and internal control system and has to report to the Audit Committee on the effectiveness of: The risk management and internal control system during the year The company s management of material business risks. Risk Management Group The company s risk management policy and the operation of the risk management and compliance system are managed by the company s Risk Management Committee comprising senior executives. The board receives quarterly reports from this group as to the effectiveness of the company s management of material risks that may impede meeting business objectives. Corporate Reporting In complying with the third bullet point of Principle 7 above, the CEO and CFO have made the following certifications to the board: That the company s financial reports are complete and present a true and fair view in all material respects of the financial condition and operational results of the company and group, and are in accordance with relevant accounting standards That the above statement is founded on a sound system of risk management and internal compliance and control, which implements the policies adopted by the board, and that the company s risk management and internal compliance and control are operating efficiently and effectively in all material respects in relation to financial reporting risks. 42

45 Corporate Governance Statement Principle 8 Remunerate Fairly and Responsibly Remuneration Committee During the transition period the Remuneration Committee consisted of the following non-executive directors (all of whom were independent): Allan Liu (chairman) Barry Davison Mark Wheatley Details of these directors attendance at Remuneration Committee meetings are set out in the Directors Report on page 20. The Remuneration Committee operates in accordance with its charter, which has been approved by the whole board. The Remuneration Committee advises the board on remuneration and incentive policies and practices generally, and makes specific recommendations on remuneration packages and other terms of employment for executive directors, other senior executives and non-executive directors. Committee members receive regular briefings from an external remuneration expert on recent developments on remuneration and related matters. Each member of the senior executive team signs a formal employment contract at the time of their appointment covering a range of matters including their duties, rights, responsibilities and any entitlements on termination. The standard contract refers to a specific formal job description. Further information on directors and executives remuneration, including principles used to determine remuneration, is set out in the Directors Report under the heading Remuneration Report. The committee also assumes responsibility for overseeing management succession planning, including the implementation of appropriate executive development programmes and ensuring adequate arrangements are in place so that appropriate candidates are recruited for later promotion to senior positions. 43

46 FINANCIAL REPORT for the year ended 31 December 2012 CONTENTS The reports and statements set out below comprise the financial report presented to the shareholders: Consolidated Statement of Comprehensive Income 45 Consolidated Statement of Financial Position 46 Consolidated Statement of Changes in Equity 47 Consolidated Statement of Cash Flows 48 Notes to the Financial Report Directors' Declaration 106 Independent Auditor's Report The financial report covers the financial statements for the consolidated entity consisting of Gold One International Limited ("Gold One") and its subsidiaries. The financial report is presented in Australian Dollars ("A$"). Gold One is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Gold One International Limited A.B.N Level Mount Street North Sydney NSW 2060 Gold One is registered in South Africa as an external company under registration number 2009/000032/10. A description of the nature of the consolidated entity's operations and its principal activities is included in the Company Review on pages 6 to 17 and in the Directors' Report on pages 18 to 31, both of which are not part of these consolidated financial statements. The consolidated financial statements were authorised for issue by the directors on 27 February The directors have the power to amend and reissue the consolidated financial statements. All press releases, consolidated financial statements and other information are available on our website. 44

47 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December Note Revenue from gold sales Cost of sales 6 ( ) (82 413) GROSS PROFIT Other income General and administrative expenses 7 (28 946) (34 751) Fair value adjustments 9 (21 545) Other expenses 10 (5 638) (45) Exploration and pre-feasibility expenditure (11 002) (8 805) Gain on bargain purchase Black Economic Empowerment transactions 31 (28 685) - OPERATING PROFIT Finance income Finance costs 12 (14 318) (3 632) PROFIT BEFORE TAXATION Income tax 13 (16 131) (18 807) PROFIT FOR THE YEAR OTHER COMPREHENSIVE (LOSS)/INCOME, NET OF TAX: Currency translation differences on foreign operations (44 604) (34 266) Fair value adjustments of available-for-sale assets TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR (11 863) TOTAL COMPREHENSIVE (LOSS)/INCOME ATTRIBUTABLE TO: Owners of the parent (9 321) Non-controlling interest (2 542) - (11 863) PROFIT FOR THE YEAR ATTRIBUTABLE TO: Owners of the parent Non-controlling interest (2 542) EARNINGS PER SHARE 14 Basic earnings per share (A$) Diluted earnings per share (A$) The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes. 45

48 CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2012 ASSETS Note CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Taxation receivable NON-CURRENT ASSETS Held-to-maturity investments Restricted cash Available-for-sale investments Property, plant and equipment Investment property Intangible assets Deferred tax assets TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Taxation payable Gold derivative liabilities Accruals Borrowings NON-CURRENT LIABILITIES Deferred tax liabilities Gold derivative liabilities Borrowings Provisions TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves 31 (44 098) (32 188) Retained earnings CAPITAL AND RESERVES ATTRIBUTABLE TO OWNERS OF GOLD ONE Non-controlling interest TOTAL EQUITY The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. 46

49 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2012 TOTAL ATTRIBUTABLE NON- CONTRIBUTED RETAINED TO EQUITY CONTROLLING TOTAL EQUITY RESERVES EARNINGS HOLDERS INTEREST EQUITY BALANCE AT 01 JANUARY (2 301) (39 026) Profit for the year Other comprehensive loss for the year - (34 266) - (34 266) - (34 266) TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS Contributions of equity net of transaction costs Share options Convertible bonds exercised Total changes (29 887) BALANCE AT 31 DECEMBER (32 188) Profit for the year (2 542) Other comprehensive loss for the year - (42 015) - (42 015) - (42 015) TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS Transactions between shareholders Contributions of equity net of transaction cost Share options Total changes 748 (11 910) BALANCE AT 31 DECEMBER (44 098) Notes The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. 47

50 CONSOLIDATED STATEMENT OF CASH FLOWS for the year ending 31 December Note CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Cash paid to suppliers and employees ( ) (83 615) Cash used in operations (7 706) Finance income Finance costs (12 098) (3 482) Income tax paid (3 819) (238) NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES 34 (20 954) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment 21 (60 831) (34 964) Proceeds from the sale of property, plant and equipment Purchase of investment property 22 (458) - Purchase of intangibles 23 (698) - Proceeds from the sale of intangibles Payment for acquisition of subsidiaries, net of cash acquired 11 ( ) - Proceeds from the sale of investments Increase in investments (360) (134) De-restricted cash NET CASH OUTFLOW FROM INVESTING ACTIVITIES ( ) (34 986) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from shares issued, net of transaction costs Proceeds from borrowings Repayment of borrowings (39 639) - NET CASH INFLOW FROM FINANCING ACTIVITIES NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS ( ) Cash at the beginning of the year (8 623) Effect of exchange rate changes on cash and cash equivalents (1 152) (8 470) CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. 48

51 NOTES TO THE FINANCIAL REPORT for the year ended 31 December 2012 CONTENTS PAGE Summary of significant accounting policies 50 Financial risk management 65 Critical accounting estimated and judgements 70 Segment information 72 Cost of sales 74 General and administrative expenditure 74 Auditors' remuneration 75 Fair value adjustments 75 Other expenses 75 Business combinations 76 Finance costs 79 Income tax 79 Earnings per share 80 Cash and cash equivalents 81 Trade and other receivables 81 Inventories 81 Held-to-maturity investments 82 Restricted cash 82 Available-for-sale investments 83 Property, plant and equipment 83 Investment property 85 Intangible assets 86 Deferred tax liabilities 88 Trade and other payables 89 Gold derivative liabilities 89 Accruals 90 Borrowings 91 Provisions 91 Contributed equity 92 Reserves 93 Non-controlling interest 94 Dividends paid 94 Reconciliation of profit after income tax to net cash (outflow)/inflow from operating activities 95 Convertible bonds 95 Commitments 96 Related parties 97 Key management personnel disclosure 99 Share based payments 103 Events after reporting period 105 Parent entity financial information

52 NOTES TO THE FINANCIAL REPORT for the year ended 31 December 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). 1.1 BASIS OF PREPARATION These general purpose consolidated 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 Gold One is a for-profit entity for the purpose of preparing the consolidated financial statements. COMPLIANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS The consolidated financial statements of Gold One also comply with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). HISTORICAL COST CONVENTION These consolidated financial statements have been prepared under the historical cost convention except for the following items in the consolidated statement of financial position: Derivative financial instruments at fair value; and Investment property at fair value. GOING CONCERN The consolidated financial statements have been prepared on the going concern basis using appropriate accounting policies, supported by reasonable judgements and estimates. The going concern basis contemplates that the group will have adequate resources to continue as a going concern for the foreseeable future. As at 31 December 2012, the total assets exceeded the total liabilities by A$ million and the group generated a profit for the year of A$ million. However, as a result of the acquisitions which occurred during the year (refer note 11), the group's current liabilities exceeded its current assets by A$ million. The negative current assets position will be reversed in 2013 through the settlement of the Rand Uranium gold forward sales agreement, improved cash flows from operations and the execution of the Cooke Underground turnaround strategy. In addition certain capital projects may be postponed to longer than 12 months in order to manage the group's cash flow. Further long term funding could be drawn down upon to remedy any potential funding shortfalls (refer note 28). PARENT ENTITY FINANCIAL INFORMATION The financial statements for the parent entity, Gold One, disclosed in note 41, has been prepared on the same basis as for the consolidated financial statements, except as set out below: INVESTMENT IN SUBSIDIARIES Investments in subsidiaries are accounted for at cost in the financial statements of Gold One. CRITICAL ACCOUNTING ESTIMATES The preparation of consolidated financial statements in conformity to IFRS, 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 consolidated financial statements are disclosed in note 4, Critical accounting estimated and judgements. 50

53 NOTES TO THE FINANCIAL REPORT for the year ended 31 December 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 2012 and the results of all subsidiaries for the year then ended. Gold One and its subsidiaries together are referred to in these consolidated financial statements as the "group" or the "consolidated entity". Subsidiaries are all entities (including special purpose entities) over which the group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date which control ceases. Adjustments are made when necessary to the consolidated 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. Non-controlling interests in the results and equity of consolidated subsidiaries are identified and recognised separately from the group's interest therein, and are recognised within the consolidated statements of comprehensive income, financial position and changes in equity respectively. 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. CHANGES IN OWNERSHIP INTERESTS The group treats transactions with non-controlling interests, that do not result in a loss of control, as transactions with equity owners of the group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of Gold One. When the group ceases to have control, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. BUSINESS COMBINATIONS The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the group. The consideration transferred also includes the fair value of any asset or liability resulting from a contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree s net identifiable assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase. 51

54 NOTES TO THE FINANCIAL REPORT for the year ended 31 December SEGMENT REPORTING 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 consolidated 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 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 consolidated 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. Cash flows arising from transactions in a foreign currency are recorded in ZAR by applying to the foreign currency amount the exchange rate between the ZAR 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 reporting date; 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 in other comprehensive income. 1.5 PROPERTY, PLANT AND EQUIPMENT 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 decommissioning 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 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. 52

55 NOTES TO THE FINANCIAL REPORT for the year ended 31 December PROPERTY, PLANT AND EQUIPMENT (continued) 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. MINING EXPLORATION Exploration costs are expensed as incurred, unless 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 when all further pre-production expenditure is capitalised. These costs include evaluation costs. UNDEVELOPED PROPERTIES Undeveloped properties include land, mineral and surface rights as well as plant and equipment used in exploration activities 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. DEPRECIATION OF MINING ASSETS Land is not depreciated. Depreciation of mine development costs, plant facilities, mineral and surface rights as well as equipment used in exploration activities 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, they are depreciated over the expected useful life of the ore body portion. 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. OTHER PLANT AND EQUIPMENT Other plant and equipment include plant, equipment, buildings, vehicles, office and computer 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 Plant and equipment Buildings Vehicles Office equipment Computer equipment AVERAGE USEFUL LIFE 3 years 20 years 3-10 years 3-10 years 3 years The residual value, useful life and depreciation method of each asset is 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. 53

56 NOTES TO THE FINANCIAL REPORT for the year ended 31 December PROPERTY, PLANT AND EQUIPMENT (continued) The gain or loss 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. 1.6 INVESTMENT PROPERTY Investment property is recognised as an asset when, and only when, it is probable that the future economic benefits that are associated with the investment property will flow to the enterprise and the cost of the investment property can be measured reliably. Investment property is initially recognised at cost. Transaction costs are included in the initial measurement. Costs include costs incurred initially and costs incurred subsequently to add to, or to replace a part of, or service a property. If a replacement part is recognised in the carrying amount of the investment property, the carrying amount of the replaced part is derecognised. FAIR VALUE Subsequent to initial measurement investment property is measured at fair value. A gain or loss arising from a change in fair value is included in net profit or loss for the period in which it arises. 1.7 INTANGIBLE ASSETS GOODWILL Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains or losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segments. IT DEVELOPMENT AND SOFTWARE Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute to future period financial benefits through revenue generation and/or cost reduction are capitalised to software and systems. Costs capitalised include external direct costs of materials and service and direct payroll and payroll related costs of employees time spent on the project. Amortisation is calculated on a straight-line basis over periods generally ranging from 3 to 5 years. IT development costs include only those costs directly attributable to the development phase and are only recognised following completion of technical feasibility and where the group has an intention and ability to use the asset. 54

57 NOTES TO THE FINANCIAL REPORT for the year ended 31 December FINANCIAL INSTRUMENTS NON-DERIVATIVE FINANCIAL ASSETS The group initially recognises loans and receivables on the date that they are originated. All other financial assets (including assets designated as at fair value through profit or loss) are recognised initially on the trade date, which is the date that the group becomes a party to the contractual provisions of the instrument. The group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial assets that is created or retained by the group is recognised as a separate asset or liability. Financial assets and liabilities are offset and the net amount presented in the consolidated statement of financial position when, and only when, the group has a legal right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. The group classifies non-derivative financial assets into the following categories: held-to-maturity investments, available-for-sale investments and loans and receivables. HELD-TO-MATURITY INVESTMENTS Held-to-maturity investments are non-derivative investments 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 investments, the whole category would be tainted and reclassified as available-for-sale. Held-to-maturity investments 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. Held-to-maturity investments are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method, less any impairment losses. Held-to-maturity investments comprise debt securities (refer note 18). AVAILABLE-FOR-SALE INVESTMENTS Available-for-sale investments are non-derivative investments that are designated as available-for- sale or are not classified in any of the above categories of financial assets. Available-for-sale investments are recognised initially at fair value. Subsequent to initial recognition, available-for-sale investments are measured at fair value and changes therein, other than impairment losses and foreign currency differences on available-for-sale debt instruments, are recognised in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognised, the gain or loss accumulated in equity is reclassified to profit or loss. Available-for-sale investments comprise equity securities and debt securities. LOANS AND RECEIVABLES Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables comprise cash and cash equivalents, and trade and other receivables. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the group in the management of its short-term commitments. 55

58 NOTES TO THE FINANCIAL REPORT for the year ended 31 December FINANCIAL INSTRUMENTS (continued) TRADE AND OTHER RECEIVABLES Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest 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. NON-DERIVATIVE FINANCIAL LIABILITIES The group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities are recognised initially on the trade date, which is the date that the group becomes a party to the contractual provisions of the instrument. The group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. The group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method. Other financial liabilities comprise borrowings, bank overdrafts, and trade and other payables. BORROWINGS Borrowings include short term and long term borrowings. Borrowings are initially recognised at fair value, net of transaction costs incurred and is subsequently stated at amortised cost. Borrowings are classified as short term unless the borrowing entity has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Borrowings are derecognised when the obligation in the contract is discharged, cancelled or has expired. Premiums or discounts arising from the difference between the fair value of borrowings raised and the amount repayable at maturity date are charged to profit or loss as finance expenses based on the effective interest method. TRADE AND OTHER PAYABLES Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. DERIVATIVE FINANCIAL INSTRUMENTS The group holds derivative financial instruments as economic hedges of its foreign currency and commodity price risk exposures. Hedge accounting is not applied. Derivatives are recognised initially at fair value; any attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value and changes therein are accounted for as described below: OTHER NON-TRADING DERIVATIVES When a derivative financial instrument is not designated in a hedge relationship that qualifies for hedge accounting, all changes in its fair value are recognised immediately in profit or loss in the line, Fair value adjustments. 56

59 NOTES TO THE FINANCIAL REPORT for the year ended 31 December FINANCIAL INSTRUMENTS (continued) IMPAIRMENT NON-DERIVATIVE FINANCIAL ASSETS A financial asset not classified as at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that loss events had an impact on the estimated future cash flows of that asset that can be estimated reliably. Objective evidence that financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the group on terms that the group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment. The group considers a decline of 20 percent to be significant and a period of nine months to be prolonged. FINANCIAL ASSETS MEASURED AT AMORTISED COST The group considers evidence of impairment for financial assets measured at amortised cost (loans and receivables and held-to-maturity investments) at both a specific asset and collective level. All individually significant assets are assessed for specific impairment. Those found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Assets that are not individually significant are collectively assessed for impairment by grouping together assets with similar risk characteristics. In assessing collective impairment, the group uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or lesser than suggested by historical trends. An impairment loss in respect of a financial assets measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables or held-to-maturity investment securities. Interest on the impaired asset continues to be recognised. When an event occurring after the impairment was recognised causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. 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 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. Gold on hand and gold in process are valued using the weighted average cost method. Cost includes production, depreciation and amortisation and related administration costs. 57

60 NOTES TO THE FINANCIAL REPORT for the year ended 31 December INVENTORIES (continued) 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 using the weighted average cost method. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses CONTRIBUTED EQUITY ORDINARY SHARES Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects CURRENT AND DEFERRED INCOME TAX Tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income. The income tax expense or income 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 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. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company s subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities. DEFERRED TAX ASSETS AND LIABILITIES Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for: Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; Temporary differences related to investments in subsidiaries to the extent that the group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and Taxable temporary differences arising on the initial recognition of goodwill. The measurement of deferred tax reflects the tax consequences that would follow the manner in which the group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. For investment property that is measured at fair value, the presumption that the carrying amount of the investment property will be recovered through sale has not been rebutted. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. 58

61 NOTES TO THE FINANCIAL REPORT for the year ended 31 December CURRENT AND DEFERRED INCOME TAX (continued) TAX EXPOSURES In determining the amount of current and deferred tax, the group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the group to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made 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 straightline basis over the lease term IMPAIRMENT OF NON-FINANCIAL ASSETS The carrying amounts of the group s non-financial assets, other than investment property, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset s recoverable amount is estimated. Goodwill and indefinite-lived intangible assets are tested annually for impairment. An impairment loss is recognised if the carrying amount of an asset or cash-generating unit ("CGU") exceeds its recoverable amount. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Subject to an operating segment ceiling test, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised 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 the actual outcome 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. 59

62 NOTES TO THE FINANCIAL REPORT for the year ended 31 December PROVISIONS (continued) 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 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 accruals 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. The liability for annual leave is recognised in the provision for employee benefits. All short-term employee benefit obligations are presented as payables. DEFINED CONTRIBUTION PLANS Pension and provident plans are funded through annual contributions. The group's contributions to the defined contribution pension and provident plans are charged to the consolidated statement of comprehensive income in the year in which they relate. The group's liability is limited to its annual determined contributions. SHARE BASED PAYMENTS Share based compensation benefits are provided to employees via an employee share scheme. The fair value of options granted under the employee share 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 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). Non-market 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. 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 the possibility of withdrawal or to providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value ACCOUNTING FOR BLACK ECONOMIC EMPOWERMENT ("BEE") TRANSACTIONS The group issued equity instruments to BEE parties. These are accounted for as equity-settled share-based payments. Equity-settled share-based payments are measured at the fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments are immediately charged to profit or loss, based on the group's estimate of the shares that will eventually vest. 60

63 NOTES TO THE FINANCIAL REPORT for the year ended 31 December ACCOUNTING FOR BLACK ECONOMIC EMPOWERMENT ("BEE") TRANSACTIONS (continued) The fair value of the grant is determined using the Monte Carlo 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 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, amounts collected on behalf of third parties. 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 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 Limited (the group's only customer). Sundry revenue, incidental to the main revenue generating activities of the operations and which is a consequence of production and selling the main products, is treated as a credit to operating costs. RENTAL INCOME Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease EARNINGS PER SHARE BASIC EARNINGS PER SHARE Basic earnings 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 PER SHARE Diluted earnings per share adjusts the figures used in the determination of basic earnings 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 FINANCE INCOME Finance income comprises interest income on funds invested. Interest income is recognised as it occurs, in profit or loss, using the effective interest method 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. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. 61

64 NOTES TO THE FINANCIAL REPORT for the year ended 31 December 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 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 consolidated financial statements. Amounts in the consolidated financial statements have been rounded off in accordance with that Class Order to the nearest thousand A$, or in certain cases, the nearest A$ RECLASSIFICATION Certain immaterial reclassifications were made to comparative figures to achieve better comparison and comparability to the current year's results. 62

65 NOTES TO THE FINANCIAL REPORT for the year ended 31 December NEW STANDARDS AND INTERPRETATIONS Certain new accounting standards and interpretations have been published that are not mandatory for the 31 December 2012 reporting period. The group's assessment of the impact of these new standards and interpretations is set out below: 2.1 STANDARDS AND INTERPRETATIONS EFFECTIVE AND ADOPTED 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: STANDARD OR INTERPRETATION EFFECTIVE FOR ANNUAL PERIODS BEGINNING ON OR AFTER IMPACT ON CONSOLIDATED FINANCIAL STATEMENTS AASB Amendments to Australian Accounting Standards - Deferred Tax: Recovery of underlying assets 01 January 2012 The amendment introduces a rebuttable presumption that investment property measured at fair value is recovered entirely by sale. The principals of the amendment have been previously applied and accordingly there was no material impact on the financial statements as a result of this amendment. 2.2 STANDARDS AND INTERPRETATIONS EARLY ADOPTED The group has chosen not to early adopt any of the standards and interpretations not yet effective. 2.3 STANDARDS AND INTERPRETATIONS NOT YET EFFECTIVE The following accounting standards, amendments and interpretations, which are not yet effective but relevant to the group, have not yet been adopted: STANDARD OR INTERPRETATION EFFECTIVE FOR ANNUAL PERIODS BEGINNING ON OR AFTER EXPECTED IMPACT ON CONSOLIDATED FINANCIAL STATEMENTS AASB 9 Financial Instruments and subsequent amendments AASB 10 Consolidated Financial Statements, AASB and AASB AASB 12 Disclosure of Interest in Other Entities 01 January 2015 AASB 9 introduced new requirements for classifying and measuring financial assets. Subsequently, new requirements were published for the accounting for financial liabilities and the derecognition of financial instruments. As the scope of the standard will be further expanded to included impairment of assets and hedge accounting, the group will review the effect of a comprehensive standard on financial instruments and consider adoption when appropriate. 01 January 2013 The standard defines the principle of control and establishes control as the basis for determining which entities are included in the consolidation financial statements. This standard will not have a significant impact on the financial statements of the group as it currently applies the criteria for establishing control as defined in AASB 10 Consolidated Financial Statements. 01 January 2013 The standard requires an entity to disclose information that enables users of financial statements to evaluate the nature of, and risks associated with, its interests in subsidiaries, entities which are not fully consolidated, including special purpose entities; and the effects of those interests on its financial position, financial performance and cash flows. The group is currently reviewing the effects of this standard and the impact on the extent of disclosures required. 63

66 NOTES TO THE FINANCIAL REPORT for the year ended 31 December NEW STANDARDS AND INTERPRETATIONS (continued) STANDARD OR INTERPRETATION EFFECTIVE FOR ANNUAL PERIODS BEGINNING ON OR AFTER EXPECTED IMPACT ON CONSOLIDATED FINANCIAL STATEMENTS AASB 13 Fair Value Measurement and AASB AASB Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements AASB Amendments to Australian Accounting Standards Presentation of Items of Other Comprehensive Income 01 January 2013 The standard explains how to measure fair value and aims to enhance fair value disclosure. The group has yet to determine which, if any, of its current measurement techniques will have to change as a result of the new guidance. It is therefore, not possible to state the impact, if any, that the new rules will have on any of the amounts recognised in the financial statements. However, application of the new standard will impact the nature and extent of information disclosed in the notes to the financial statements. 01 July 2013 Removes the individual key management personnel disclosure requirements from AASB 124 Related Party Disclosures, to achieve consistency with the international equivalent standard and remove a duplication of the requirements with the Corporations Act These amendments cannot be adopted early. 01 July 2012 The main change from these amendments is a requirement for entities to group items presented in other comprehensive income on the basis of whether they may be recycled to profit or loss in the future. The amendments do not address which items are presented in other comprehensive income. We do not anticipate that this additional disclosure will have a significant impact on the financial statements. AASB Amendments to Australian Accounting Standards arising from Annual Improvements Cycle 01 January 2013 The annual improvements project makes minor but necessary annual amendments to Australian Accounting Standards. Amendments made in the Cycle are: AASB 101 clarifies the disclosure requirements for comparative information when an entity provides a third balance, either because it has applied an accounting policy retrospectively, restated items retrospectively or reclassified items in its financial statements or does so voluntarily. AASB 116 clarifies that spare parts and servicing equipment are classified as property, plant and equipment rather than inventory when they meet the definition of property, plant and equipment. AASB 132 clarifies the treatment of income tax relating to distributions and transaction costs. AASB 134 clarifies the disclosure requirements for segment assets and liabilities in interim financial statements. The group does not anticipate that this additional disclosure will have a significant impact on the financial statements. 64

67 NOTES TO THE FINANCIAL REPORT for the year ended 31 December FINANCIAL RISK MANAGEMENT The group's activities expose it to a variety of financial risks including, market risk (interest rate risk, foreign exchange risk and commodity price risk), credit risk and liquidity risk. The group's overall risk management process focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on its financial performance. The group's Board of Directors has the overall responsibility for the establishment and oversight of the group's risk management framework. The group's Audit Committee oversees how management monitor compliance with the group's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risk faced by the group. The group Audit Committee is assisted in its oversight role by Internal Audit. The group holds the following financial instruments: Note LOANS AND RECEIVABLES Short-term deposits Cash on hand Trade receivables Restricted cash HELD-TO-MATURITY Held-to-maturity investments AVAILABLE-FOR-SALE Available-for-sale investments FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS Gold derivative liabilities FINANCIAL LIABILITIES AT AMORTISED COST Trade and other payables Borrowings MARKET RISK (i) INTEREST RATE RISK The group's exposure to cash flow interest rate risk relates to the group s cash and cash equivalents, short-term deposits, restricted cash, held-to-maturity investments and borrowings. The group constantly analyses its interest rate exposure. Within this analysis consideration is given to potential renewals of existing positions, alternatives and the mix of fixed and variable interest rates. 65

68 NOTES TO THE FINANCIAL REPORT for the year ended 31 December FINANCIAL RISK MANAGEMENT (continued) SENSITIVITY ANALYSIS A change of 100 basis points in interest rates at the end of the year would have increased/(decrease) in profit or loss by the amount shown below. This analysis assumes that all other variables in particular foreign currency rates, remain constant. PROFIT OR LOSS 100 bp INCREASE 100 bp DECREASE 2012 Cash and cash equivalents 256 (256) Held-to-maturity investments 15 (15) Restricted cash 96 (96) Borrowings (1 571) (1 204) PROFIT OR LOSS 100 bp INCREASE 100 bp DECREASE 2011 Cash and cash equivalents (1 603) Held-to-maturity investments 11 (11) Restricted cash 8 (8) (ii) FOREIGN EXCHANGE RISK (1 622) The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US Dollar ("US$") and Australian Dollar ("A$"). Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting. The group generally manages its exposure to currency fluctuations by holding cash reserves in its functional currency unless there is a requirement to provide funding for operations in currency jurisdictions outside of its functional currency jurisdiction or to meet future committed obligations that are denominated in a currency other than its functional currency for capital or operating expenditure, debt obligations, acquisitions or dividends. Net exposures for operating and capital expenditure that are denominated in currencies other than the functional currency for amounts greater than the equivalent of US$ 10 million, on a three month rolling forward basis, are hedged to ensure there are no adverse functional currency losses. Management strategies for exposure to capital projects for amounts greater than the equivalent of US$ 10 million that are denominated in currencies other than the functional currency are not permitted without express Board approval, which can be obtained during the capital expenditure approval as part of the budget process or a capital project approval. 66

69 NOTES TO THE FINANCIAL REPORT for the year ended 31 December FINANCIAL RISK MANAGEMENT (continued) ANALYSIS OF FOREIGN EXCHANGE EXPOSURE The analysis of foreign exchange exposure, at the end of the reporting period, by currency is set out below: US$ '000 US$ '000 ASSETS Cash and cash equivalents Trade receivables LIABILITIES Trade and other payables - (496) - (13 179) Gold derivative liabilities (54 996) Borrowings ( ) SENSITIVITY ANALYSIS ZAR AGAINST US$ A strengthening/(weakening) of the ZAR against the US$ would have affected the measurement of financial instruments denominated in a foreign currency and increase/(decreased) profit or loss by the amounts shown below. The analysis is based on foreign currency exchanges rate variations that the group considers to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates and commodity prices remain constant: PROFIT OR LOSS STRENGTHENING WEAKENING MOVEMENT 2012 US$ 10% (4 829) 2011 US$ 10% - - SENSITIVITY ANALYSIS US$ AGAINST A$ A strengthening/(weakening) of the US$ against the A$ would have affected the measurement of financial instruments denominated in a foreign currency and increase/(decreased) profit or loss by the amounts shown below. The analysis is based on foreign currency exchanges rate variations that the group considers to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates and commodity prices, remain constant: PROFIT OR LOSS STRENGTHENING WEAKENING MOVEMENT 2012 A$ 10% (12 036) 2011 A$ 10% - - SENSITIVITY ANALYSIS ZAR AGAINST A$ There is no currency risk on A$ financial instruments as they are held in companies with A$ as the functional currency. 67

70 NOTES TO THE FINANCIAL REPORT for the year ended 31 December FINANCIAL RISK MANAGEMENT (continued) (iii) COMMODITY PRICE RISK Risk arises from fluctuations in the gold price. The risk is managed by the natural correlation between the gold price in US$ and the US$/ZAR exchange rate. If the gold price declines, the ZAR tends to weaken thereby limiting the variability in the revenue recognition. Gold production need not be sold intraday. This is however subject to the restriction that the maximum combined currency and commodity open position arising from withholding sales must be limited to an average weeks gold production. In addition, up to 50% of the estimated gold production for the next rolling three month period may be sold forward provided that the commodity hedge is aligned with a currency hedge undertaken. SENSITIVITY ANALYSIS A change in the gold price by 10% with all other variables held constant, in particular foreign currency rates, would have the following impact on the exposure to commodity risk at the end of the period: PROFIT OR LOSS STRENGTHENING WEAKENING MOVEMENT 2012 Gold derivative liabilites 10% (10 557) Gold derivative liabilites 10% - - CREDIT RISK Credit risk is managed on a group basis. Credit risk mainly arises from cash equivalents and deposits with banks and financial institutions, as well as credit exposure to customers, including outstanding receivables and committed transactions. The group receives timeous payment on gold sales and only deposits cash with various major banks and financial institutions with a minimum independent rating of "A", based on the ratings by Fitch Ratings. The group's only customer, Rand Refinery Limited, represents the majority of trade receivables as set out in note 16. LIQUIDITY RISK Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions as they fall due. The group manages liquidity risk by continuously monitoring forecast and actual production and cash flows and matching the maturity profiles of financial assets and liabilities. Surplus funds are generally only invested in instruments that are tradable in highly liquid markets. FINANCING ARRANGEMENTS The group has a number of intraday trading facilities in place across several institutions for the purpose of gold and foreign exchange services. The group also has a A$ million unsecured, undrawn overdraft facility. MATURITY OF FINANCIAL INSTRUMENTS The table below analyses the group s financial liabilities and net-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the consolidated statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. 68

71 NOTES TO THE FINANCIAL REPORT for the year ended 31 December FINANCIAL RISK MANAGEMENT (continued) MATURITY OF FINANCIAL LIABILITIES CARRYING AMOUNT LESS THAN ONE YEAR BETWEEN 1-2 YEARS MORE THAN 3 YEARS TOTAL 2012 Trade and other payables (33 403) (33 403) - - (33 403) Gold derivative liabilities (76 834) (30 387) (21 965) (24 482) (76 834) Borrowings ( ) (70 821) ( ) (5 272) ( ) ( ) ( ) ( ) (5 272) ( ) 2011 CARRYING AMOUNT LESS THAN ONE YEAR BETWEEN 1-2 YEARS MORE THAN 3 YEARS TOTAL Trade and other payables (22 897) (22 897) - - (22 897) FAIR VALUE ESTIMATION The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The group uses a variety of methods and make assumptions that are based on market conditions existing at the end of each reporting period. The group has adopted AASB 7 Financial Instruments: Disclosure, which requires disclosure of the fair value measurements by level of the following fair value measurement hierarchy: Quoted prices (unadjusted) in active markets for identical assets (level 1); Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2); and Inputs for the asset or liability that are not based on observable market data (level 3). The group classified the financial assets and financial liabilities as follows: Available-for-sale investments - Level 2; Gold derivative liabilities - forward sale agreement - Level 2; and Gold derivative liabilities- Franco Nevada gold derivative - Level 3. ACCOUNTING CLASSIFICATION AND FAIR VALUES The accounting policies for financial instruments have been applied to the line items below: TOTAL CARRYING VALUE FAIR VALUE 2012 Note FINANCIAL ASSETS Cash and cash equivalents Trade receivables Held-to-maturity investments Restricted cash Available-for-sales investments FINANCIAL LIABILITIES Trade and other payables Gold derivative liabilities Borrowings

72 NOTES TO THE FINANCIAL REPORT for the year ended 31 December FINANCIAL RISK MANAGEMENT (continued) TOTAL CARRYING VALUE FAIR VALUE 2011 Note FINANCIAL ASSETS Cash and cash equivalents Trade receivables Held-to-maturity investments Restricted cash FINANCIAL LIABILITIES Trade and other payables CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the amounts represented in the consolidated financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the consolidated financial statements. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below: FAIR VALUE ESTIMATION PROPERTY, PLANT AND EQUIPMENT The fair value of property, plant and equipment recognised as a result of a business combination is the estimated amount for which property could be exchanged on the acquisition date between a willing buyer and a willing seller, in an arm's length transaction, after proper marketing, wherein the parties had each acted knowledgeably. The fair value of the items of property, plant and equipment is based on the market, income and costs approaches using quoted market prices for similar items when available and depreciated replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence. MINERAL RIGHTS The fair value of mineral rights, which are recognised as part of a business combination, comprising mineral reserves and mineral resources, are determined by reference to market values of those or similar items where available, or by discounting expected future cash flows using the discount rate to present values. FINANCIAL INSTRUMENTS The fair value of financial instruments that are not traded in an active market (for example, over the counter derivatives) is determined by using valuation techniques. The group uses its judgement to select a variety of methods and makes assumptions that are mainly based on market conditions existing at the end of each reporting period. 70

73 NOTES TO THE FINANCIAL REPORT for the year ended 31 December CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued) FORWARD EXCHANGE CONTRACTS The fair values of forward exchanges contracts are based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the group entity and counterparty when appropriate. INVESTMENT PROPERTY An experienced valuator having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued, values the group's investment property portfolio every six months. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably. In the absence of current prices in an active market, the valuations are prepared by considering the estimated rental value of the property. A market yield is applied to the estimated rental value to arrive at the gross property valuation. When accrual rents differ materially from the estimated rental value, adjustments are made to reflect actual rents. SHARE BASED PAYMENT TRANSACTIONS Share based payments are calculated at fair value at the date granted and recognised as an expense over the vesting period. The group uses certain assumptions as inputs into the valuation model. The key assumptions and judgements used in the valuation of share based payments is set out in note 31 and 39. MEASUREMENT OF ASSET RETIREMENT OBLIGATION The present value of the asset retirement obligation is calculated annually using the expected cash flow approach that reflects management's best estimates discounted at a credit adjusted risk-free interest rate. Rehabilitation costs are expected when exploration, evaluation and development activities give rise to the need for restoration. The costs include obligations relating to reclamation, waste site closure, plant closure and other costs associated with the restoration of the site. These estimates of the restoration obligations are based on current technology and legal requirements and future costs. Any changes in the estimates are adjusted on a prospective basis. In determining the restoration obligations, the entity has assumed no significant changes will occur in the relevant South African legislation in relation to restoration of such mines in the future. Refer to note 29 of the notes to the consolidated financial statements for the key assumptions used in determining the asset retirement obligation. MINERAL RESERVES Mineral reserves are the basis of future cash flow estimates and unit-of-production depreciation and depletion and amortisation calculations. Management uses estimates and assumptions in determining the reserves. These estimates and assumptions are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstance. The group is required to determine and report on the mineral reserves in accordance with the JORC and SAMREC codes. Estimates of mineral reserves may change from year to year due to the change in economic assumptions used to estimate ore reserves and due to additional geological data becoming available during the course of operations. Changes in reported proven and probable reserves may affect the group's financial results and position in a number of ways including the following: Asset carrying values may be affected due to changes in estimated cash flows; Depreciation and amortisation charges to profit or loss may change as these are calculated on the units-ofproduction method, or where the useful economic lives of assets change; Decommissioning site restoration and environmental provisions may change where changes in Ore Reserves affect expectations about the timing or cost of these activities; and The carrying value of deferred tax assets may change due to changes in estimates of the likely recovery of the tax benefits. 71

74 NOTES TO THE FINANCIAL REPORT for the year ended 31 December CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued) USEFUL LIVES AND RESIDUAL VALUES The group depreciates its mining assets using the units-of-production method, based on proven and probable mineral reserves. The calculation of the units-of-production rate of depreciation could be impacted to the extent that actual production is different from current forecast production based on proven and probable reserves. This would generally arise when there are significant changes in any of the factors or assumptions used in estimating mineral reserves. Plant and equipment is depreciated on a straight line basis over their estimated useful lives, which do not exceed the estimated mine life. The estimation of the useful lives of assets is based on historic performance as well as expectations about future use. These methods require a significant degree of judgement to be applied by management. The actual lives of these assets can vary depending on a variety of factors, including technological innovation, product life cycles and maintenance programmes. 5. SEGMENT INFORMATION DESCRIPTION OF SEGMENTS Management has determined the operating segments based on the reports reviewed by the Executive Committee and used to make strategic decisions. The committee considers the business from both a functional and a geographic perspective and has identified five reportable segments: Corporate, which consists of corporate, administrative and business development activities; Modder East, Cooke Underground and Randfontein Surface Operations, which represent the segments responsible for the extraction of and processing of gold ore into fine gold; and Projects, which consist of the exploration and feasibility studies of the group's mineral properties. The reportable segments have changed from the previous period due to the acquisition of new businesses during the year. The reported measure of assets and liabilities excludes inter-segment assets and liabilities. Corporate assets consist mainly of cash and cash equivalents managed centrally for the other segments. Performance is measured based on segment profit before tax as included in the internal management reports that are reviewed by the Executive Committee. The group is primarily domiciled in South Africa. The revenue, profit and total non-current assets described in the table below are located in South Africa. SEGMENT INFORMATION PROVIDED TO THE EXECUTIVE COMMITTEE: SEGMENT REVENUE Corporate - - Modder East Cooke Underground Randfontein Surface Projects - - CONSOLIDATED SEGMENT REVENUE (LOSS)/PROFIT BEFORE TAX Corporate (27 075) (25 068) Modder East Cooke Underground (38 199) (12 457) Randfontein Surface (12 063) - Projects (16 307) - SEGMENT (LOSS)/PROFIT BEFORE TAX (20 333) Gain on bargain purchase Depreciation on fair values of mineral reserves and resources (11 904) - Black Economic Empowerment transactions (28 686) - CONSOLIDATED PROFIT BEFORE TAX

75 NOTES TO THE FINANCIAL REPORT for the year ended 31 December SEGMENT INFORMATION (continued) OTHER PROFIT AND LOSS DISCLOSURE: FINANCE COSTS INCOME TAX DEPRECIATION 2012 Corporate Modder East Cooke Underground (8 939) Randfontein Surface (3 141) Projects FINANCE COSTS INCOME TAX DEPRECIATION 2011 Corporate Modder East Cooke Underground Randfontein Surface Projects ASSETS Corporate Modder East Cooke Underground Randfontein Surface Projects Fair values on mineral resources and reserves Goodwill CONSOLIDATED ASSETS LIABILITIES Corporate ( ) (16 292) Modder East ( ) (42 798) Cooke Underground ( ) - Randfontein Surface (42 561) - Projects (38 603) (2 639) CONSOLIDATED TOTAL LIABILITIES ( ) (61 729) Cooke Underground and Randfontein Surface Operations were not under control of the group during

76 NOTES TO THE FINANCIAL REPORT for the year ended 31 December COST OF SALES Cost of sales comprise the following: By-product revenue Capital re-allocation Consultants and contractors costs (27 519) (10 954) Consumables ( ) (33 309) Depreciation (55 829) (20 442) Employee costs ( ) (35 693) Other costs (3 702) (830) Retrenchment cost (3 209) - Royalty tax (3 351) (951) Staff refreshments (94) (58) Stock movement (2 503) Utility costs (34 387) (4 353) 7. GENERAL AND ADMINISTRATIVE EXPENDITURE ( ) (82 413) Audit fees (1 146) (583) Consultants and management services (7 685) (8 095) Depreciation and amortisation (248) (151) Directors' remuneration (4 429) (2 865) Employee share option plan (1 420) (3 898) Insurance (405) (146) Listing fees (824) (762) Marketing (97) (148) Provision for bad debts (1 861) - Operating lease expenses (475) (263) Other administrative expenses (3 160) (1 194) Salaries and benefit expenses (5 174) (4 613) Transaction costs (2 022) (12 033) (28 946) (34 751) 74

77 NOTES TO THE FINANCIAL REPORT for the year ended 31 December A$ A$ 8. AUDITORS' REMUNERATION The following fees were payable for services provided during the year by the auditor of the group and its related practices: PRICEWATERHOUSECOOPERS AUSTRALIA Audit and assurance services Other services PRICEWATERHOUSECOOPERS SOUTH AFRICA Audit and assurance services Tax compliance services Other services PRICEWATERHOUSECOOPERS LUXEMBOURG Tax compliance services PRICEWATERHOUSECOOPERS CYPRUS Tax compliance services Note 9. FAIR VALUE ADJUSTMENTS Gold derivative liabilities 26 (21 406) - Convertible bonds Other (139) OTHER EXPENSES (21 545) Impairment of property, plant and equipment 21 (2 700) - Impairment of intangible assets 23 (1 636) - (Loss)/gain on foreign exchange transactions (1 153) 34 Loss on disposal of assets (149) (79) (5 638) (45) 75

78 NOTES TO THE FINANCIAL REPORT for the year ended 31 December BUSINESS COMBINATIONS (a) ACQUISITION OF A SUBSIDIARY - RAND URANIUM In January 2012, Newshelf 1114 Proprietary Limited, a 100% held subsidiary of Gold One, acquired 100% of the issued share capital of the mining company, Rand Uranium Proprietary Limited ("Rand Uranium"). All conditions precedent to the acquisition of Rand Uranium for a purchase price of US$ million (A$ million), were fulfilled and the acquisition was declared unconditional on 06 January 2012 ("the acquisition date"). The purchase price was settled in cash on the completion date. The acquisition has significantly increased the group's production capacity. Rand Uranium has been consolidated into the Gold One group from 06 January 2012 and contributed a revenue of A$ million and net loss of A$ million for the year. The fair value assessments and purchase price allocation have been finalised. An adjustment was made to the mineral resources and mineral reserves, together with the consequential tax effects. Details of the purchase consideration and the fair values of the net assets acquired are as follows: 2012 FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED Asset retirement provisions (23 271) Available-for-sale investments Borrowings (30 080) Cash and cash equivalents Deferred taxation on fair value adjustment (23 209) Gold derivative liabilities (57 844) Inventories Investment property Mineral reserve and related rights Mineral resources and related rights Property, plant and equipment Taxation payable (150) Trade and other payables (24 215) Trade and other receivables Total identifiable net assets Gain on bargain purchase ( ) COST OF INVESTMENT NET CASH ON ACQUISITION Cash consideration paid ( ) Cash and cash equivalents ( ) Acquisition costs of A$ million (2011: A$ million) are included in general and administration expenses in profit or loss and in operating cash flows in the consolidated statement of cash flows. BARGAIN PURCHASE A bargain purchase arose in the acquisition of Rand Uranium as a result of the distressed sale of the assets. Management have performed a reassessment of the acquisition and are satisfied that all the assets acquired and liabilities assumed have been correctly identified. As a result, a gain from the bargain purchase amounting to A$ million was recognised in profit or loss. 76

79 NOTES TO THE FINANCIAL REPORT for the year ended 31 December BUSINESS COMBINATIONS (continued) (b) ACQUISITION OF A SUBSIDIARY - GOLIATH GOLD MINING LIMITED Goliath Gold Mining Limited ("Goliath"), previously known as White Water Resource Limited, acquired all the Megamine Proprietary Limited ("Megamine") assets of Gold One Africa, a 100% held subsidiary of Gold One. All conditions precedent to the acquisition of Goliath were fulfilled and the transaction was declared unconditional on 28 March Goliath settled the purchase price by issuing shares to Gold One Africa. In accordance with AASB 3 Business Combinations, this transaction was determined to be a "reverse acquisition". In a reverse acquisition the legal acquirer, Goliath becomes the accounting subsidiary and the legal acquiree, Megamine, becomes the accounting acquirer. Goliath incurred a net loss of A$ million for the nine months, from 01 April 2012 to 31 December 2012, which has been included in the Gold One group accounts. If the acquisition had occurred on 01 January 2012, Goliath would have contributed a loss of A$ million to the Gold One group. Goliath was acquired in order for the group to gain control over Goliath's explorations and prospecting resources. Details of the purchase consideration and the provisional fair values of the net assets acquired are as follows: 2012 FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED Cash and cash equivalents Investment property 485 Mineral resources Other financial liabilities (2 469) Other financial assets Property, plant and equipment 3 Trade and other receivables 162 Trade and other payables (2 473) Total identifiable net assets Goodwill MARKET VALUE OF CONSIDERATION Acquisition costs of A$ million (31 December 2011: A$ million) are included in general and administration expenses in profit or loss and in operating cash flows in the consolidated statement of cash flows. GOODWILL Goodwill was measured as the excess of the fair value of the consideration effectively transferred, as the market value of the shares issued, which was in excess of the net amount of Goliath's recognised identifiable assets and liabilities. No deferred tax is raised on goodwill. NON-CONTROLLING INTEREST As part of the business combination, Goliath issued 104,891,947 shares to Gold One Africa, resulting in Gold One Africa owning 72% of Goliath's issued share capital. The amount of non-controlling interest in Goliath recognised at the acquisition date was A$ million, which was measured at fair value. The fair value was determined as the market value of the shares in issue and the proportion of Megamine assets contributed to Goliath. 77

80 NOTES TO THE FINANCIAL REPORT for the year ended 31 December BUSINESS COMBINATIONS (continued) (c) ACQUISITION OF A SUBSIDIARY - EZULWINI In August 2012, Gold One acquired 100% of the issued share capital of First Uranium Limited ("Cyprus"), which in turn holds 100% of the issued share capital of Ezulwini Mining Company Proprietary Limited ("Ezulwini"), a mining company adjacent to Gold One's Cooke assets ("Rand Uranium"). All conditions precedent to the acquisition of Cyprus were fulfilled and the acquisition was declared unconditional on 01 August The purchase price of A$ million (US$ million) was settled in cash on completion date. Ezulwini was acquired in order to integrate the company with the Cooke Underground and Randfontein Surface Operations to unlock the project's uranium potential. Ezulwini was consolidated into the Gold One group from 01 August 2012 and contributed revenue of A$ million and a net loss of A$ million for the five months. If the acquisition had occurred on 01 January 2012, Ezulwini would have contributed revenue of A$ million and a net loss of A$ million. The fair values have been determined on a provisional basis, which are pending the outcome of a review and audit of the proven and probable gold and uranium reserves and resources. The outcome of this process is expected to be completed in April The following fair values are considered provisional: Mineral reserves and resources and related rights; and Deferred tax on fair value adjustments. As a result of the finalisation of the fair values of the above items arising from the acquisition, the gain on bargain purchase may increase. Details of the purchase consideration and the provisional fair values of the net assets acquired are as follows: 2012 PROVISIONAL FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED Asset retirement provisions (6 514) Cash and cash equivalents Gold derivative liabilities (44 564) Held-to-maturity investments 374 Inventories Property, plant and equipment Restricted cash Taxation payable (1 163) Trade and other payables (13 323) Trade and other receivables Total identifiable net assets Gain on bargain purchase (5 114) COST OF INVESTMENT NET CASH ON ACQUISITION Cash consideration paid (67 159) Cash and cash equivalents (51 842) Acquisition costs of A$ million (2011: A$ million) are included in general and administrative expenses in profit or loss and in operating cash flows in the consolidated statement of cash flows. BARGAIN PURCHASE A bargain purchase arose in the acquisition of Ezulwini as a result of the distressed sale of assets. Management are in the process of finalising the fair value of the identifiable assets and liabilities. As a result, a provisional gain from the bargain purchase was recognised a gain on bargain purchase amounting to A$ million in profit or loss. 78

81 NOTES TO THE FINANCIAL REPORT Note 11. BUSINESS COMBINATIONS (continued) (d) RECONCILIATION OF PURCHASE CONSIDERATION - CASH OUTFLOW Outflow of cash to acquire subsidiary, net of cash acquired: Cash consideration ( ) - Less: Cash balance acquired Outflow of cash - investing activities ( ) - (e) RECONCILIATION OF GAIN ON BARGAIN PURCHASE Gain on bargain purchase comprises the following: Rand Uranium acquisition 11(a) Ezulwini acquisition 11(c) FINANCE COSTS Finance charges on borrowings 28 (11 759) - Unwinding of discount on asset retirement obligation 29 (2 220) (150) Other (339) (3 482) 13. INCOME TAX The major components of the income tax expenses are: (14 318) (3 632) CURRENT INCOME TAX Current income tax charge (4 323) (238) Prior year 94 - (4 229) (238) DEFERRED INCOME TAX Current year (12 435) (29 827) Prior year (11 902) (18 569) INCOME TAX IN THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (16 131) (18 807) NUMERICAL RECONCILIATION OF INCOME TAX TO PRIMA FACIE TAX PAYABLE: Accounting profit before tax Tax at the standard corporate tax rate of 28% (2011: 28%) (12 959) (19 236) Deferred tax assets not recognised (21 031) (1 790) Non-deductible expenses (19 613) (8 727) Non taxable income Prior year adjustment - deferred tax (533) (257) Prior year adjustment - deferred tax on special capital allowances Prior year adjustment - income tax 94 - Special capital allowances - current year Tax rate differential (5 263) TOTAL CHARGE (16 131) (18 807) 79

82 NOTES TO THE FINANCIAL REPORT for the year ended 31 December INCOME TAX (continued) AMOUNTS ARISING IN THE CURRENT REPORTING PERIOD AND RECOGNISED DIRECTLY IN EQUITY AND NOT IN PROFIT AND LOSS: Aggregated current tax - - Aggregated deferred tax (1 006) - TAX LOSSES Unused tax losses not recognised as deferred tax assets POTENTIAL TAX BENEFIT AS 28% (2011: 28%) UNRECOGNISED TEMPORARY DIFFERENCES Unrecognised deferred tax assets relating to temporary differences EARNINGS PER SHARE EARNINGS PER SHARE (A$) Basic earnings per share Diluted earnings per share BASIC EARNINGS PER SHARE The calculation of basic earnings per share at 31 December 2012 was based on the profit attributable to ordinary shareholders of A$ million (2011: A$ million) and a weighted average number of shares of ordinary shares outstanding of 1,416,121,312 (2011: 840,367,163), calculated as follows: Profit attributable to the owners of the company () WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES (BASIC) Issued ordinary shares at 1 January Effect of share options exercised Effect of shares issued related to a business combination - Goliath Issue of shares - Tulo Issue of shares - Jintu transaction Conversion of bondholders WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES DILUTIVE EARNINGS PER SHARE The calculation of diluted earnings per share at 31 December 2012 was based on profit attributable to the ordinary shareholders of A$ million (2011: A$ million) after diluted potential ordinary shares of 1,457,290,638 (2011: 865,867,651), calculated as follows: WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES (DILUTED): Weighted average number of ordinary shares (basic) Effect of share options on issue: - Employee share options in issue DILUTIVE NUMBER OF ORDINARY SHARES The average market value of the group's shares for purposes of calculating the dilutive effect of share options was based on quoted market prices for the period during which the options were outstanding. 80

83 NOTES TO THE FINANCIAL REPORT for the year ended 31 December CASH AND CASH EQUIVALENTS Short-term deposits Cash at bank RECLASSIFICATION OF CASH TO RESTRICTED CASH A prior year cash balance amounting to A$ million, relating to funds allocated for rehabilitation after the life-of mine was reallocated to restricted cash (refer note 19). 16. TRADE AND OTHER RECEIVABLES Trade receivables Prepayments GST/VAT Funds in trust Trade and other receivables are non-interest bearing and generally settled within 30 days. FUNDS IN TRUST Funds in trust refers to a dispute with Grinaker-LTA Mining. The dispute was settled on 17 February 2012 in the amount of A$ million. The balance of the funds in trust being A$ million were returned to the group. FAIR VALUE AND CREDIT RISK Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value. The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security. 17. INVENTORIES Bullion stock Spares and consumables Included in cost of sales is an amount of A$ million (2011: A$ nil) representing a write down to net realisable value of bullion stock during the year in respect of the Cooke Underground and Randfontein Surface Operations. This arose as a result of the average cost of production at these operations exceeding the average sales price achieved for bullion stock for the period because most of the gold produced by the Cooke Underground and Rand Surface Operations was delivered into the unfavourable gold forward sales contracts which were acquired as part of the Rand Uranium acquisition. As at 31 December 2012, the group has A$ million (2011: A$ nil) of bullion stock on hand which was measured at its net realisable value. 81

84 NOTES TO THE FINANCIAL REPORT Note 18. HELD-TO-MATURITY INVESTMENTS Balance at the beginning of the year Acquired during the year Investment income net of transaction costs Contributions Effect of translation to presentation currency (90) (293) GUARDRISK POLICY The group invested in a Guardrisk policy to enable it to furnish a guarantee to the Department of Mineral Resources for future rehabilitation expenditure at Modder East. Premiums are paid in accordance with the policy. The group earns investment income on the balance invested and the policy will mature after three years after which the balance on the account will be refunded to the group. Any claim for rehabilitation will be paid by Guardrisk. Claims in excess of the fund balance are owed to Guardrisk and carry interest at the prime lending rate. A further premium of A$ million is due in 2013 and the policy expires in September MOMENTUM The momentum investment is a savings plan with monthly contributions of A$ 50,000 for a period of 10 years, from 01 January 2012 to 31 December 2021, and automatically continuing thereafter. The contribution growth is 10% per annum. IMPAIRMENT AND RISK EXPOSURE The maximum exposure to credit risk at the end of the reporting period is the carrying amount of the investments. Refer to note 3 for more information on the group's exposure to credit and market risk and fair value information. None of the held-to-maturity investments are either past due or impaired. All held-to-maturity investments are denominated in ZAR. 19. RESTRICTED CASH Restricted cash include the following: Guarantees Environmental trust fund The environmental trust fund is a trust under the group's control. Contributions to the trust are invested primarily in interest-bearing short-term investments. The costs of these investments approximate their fair value. These investments provide for the estimated cost of rehabilitation during and after the life of the mine for the group's mines. Income earned on the investments is restricted in use and may only be used to fund the group's approved rehabilitation costs. The guarantees relate to the performance bank and insurance guarantees of the Department of Mineral Resources for environmental rehabilitation, as well as performance guarantees to Eskom for energy. 82

85 NOTES TO THE FINANCIAL REPORT Note 20. AVAILABLE-FOR-SALE INVESTMENTS Acquired during the year Adjustment to fair value, net of transaction costs Effect of translation to presentation currency (1 362) - COOK REHABILITATION TRUST INVESTMENTS The funds held in the Cooke Rehabilitation Trust are treated as restricted as these funds have been placed into a separate trust in order to meet the closure liability at the end of the life of the mine. The amount put into trust is agreed to by the Department of Mineral Resources based on a valuation performed by an expert and cannot be accessed until such time as they are required to rehabilitate the land on which mining has taken place. These funds are invested in various instruments in order to earn a return which is also placed in trust. No funds can be released from the trust without the Department of Mineral Resources s consent and this release has to be in terms of the trust deed. The investment comprises equity linked deposits with various term ranging from 3-5 years with a guaranteed interest of 6.00% % per annum. The yield to date ranges from 9.00% % per annum. IMPAIRMENT AND RISK EXPOSURE The maximum exposure to credit risk at the end of the reporting period is the carrying amount of the investments. Refer to note 3 for more information on the group's exposure to credit and market risk and fair value information. 21. PROPERTY, PLANT AND EQUIPMENT COST ACCUMULATED DEPRECIATION CARRYING VALUE COST ACCUMULATED DEPRECIATION CARRYING VALUE Mine development costs and plant facilities ( ) (19 317) Undeveloped properties (33 453) (895) Other plant and equipment (38 844) (18 261) TOTAL ( ) (38 473)

86 NOTES TO THE FINANCIAL REPORT for the year ended 31 December PROPERTY, PLANT AND EQUIPMENT (continued) RECONCILIATION OF PROPERTY, PLANT AND EQUIPMENT CARRYING AMOUNT AT THE BEGINNING OF THE YEAR ADDITIONS ACQUISITION THROUGH BUSINESS COMBINATION DISPOSALS TRANSFERS FOREIGN CURRENCY TRANSLATION RESERVE DEPRECIATION IMPAIRMENT LOSS CARRYING AMOUNT AT THE END OF THE YEAR Mine development, development costs and plant facilities (16 218) (25 572) (26 400) (2 700) Undeveloped properties (18 613) (14 499) (15 929) Other plant and equipment (26) (6 908) (13 406) (26) - (46 979) (55 735) (2 700) RECONCILIATION OF PROPERTY, PLANT AND EQUIPMENT CARRYING AMOUNT AT THE BEGINNING OF FOREIGN CURRENCY RECLASSIFIED TRANSLATIONTO INTANGIBLE CARRYING AMOUNT AT THE END OF THE YEAR ADDITIONS DISPOSALS RESERVE ASSETS DEPRECIATION THE YEAR A$' 000 Mine development, development costs and plant facilities (18 521) - (12 818) Undeveloped properties (30) (4 405) - (577) Other plant and equipment (161) (7 483) (18) (8 193) (191) (30 409) (18) (21 588)

87 NOTES TO THE FINANCIAL REPORT for the year ended 31 December PROPERTY, PLANT AND EQUIPMENT (continued) PLEDGED AS SECURITY Refer to note 28 for information on assets pledged as security on long term borrowings. Refer to note 36 for contractual and capital commitments. DEPRECIATION AND AMORTISATION CHARGED TO PROPERTY, PLANT AND EQUIPMENT IS MADE UP AS FOLLOWS: Depreciation and amortisation classified as cost of sales (55 829) (20 442) Depreciation and amortisation classified as exploration and pre-feasibility expense (364) (325) Depreciation and amortisation classified as general and administrative expenditure (248) (151) Effect of translation to presentation currency - 96 IMPAIRMENT LOSS (56 441) (20 822) The impairment loss recorded in 2012 relates to assets which were flooded at the Megamine site. The whole amount of capitalised development cost and related decommission assets was recognised in profit or loss. The remaining Megamine surface assets were not considered impaired as these assets are being applied in the exploration and development of other exploration assets in the group. 22. INVESTMENT PROPERTY RECONCILIATION OF INVESTMENT PROPERTY CARRYING AMOUNT AT THE BEGINNING OF THE YEAR ADDITIONS ACQUISITION THROUGH BUSINESS COMBINATION FOREIGN CURRENCY TRANSLATION RESERVE CARRYING AMOUNT AT THE END OF THE YEAR Land and buildings at fair value (411) (411) DETAILS OF VALUATION LAND The investment property represents various properties situated in Johannesburg and Westonaria. These properties are freehold and are held for capital appreciation. The investment property valuations are updated annually by a valuator. The latest valuation was performed by Mr HD Jooste, Group Property and Real Estate Rights Manager of Gold One on 31 December Mr HD Jooste has the required experience to conduct the valuation. The investment property was valued using the comparable sales method. BUILDINGS Gold One acquired a residential property in Johannesburg. This property is leased out at market related rates to generate rental income. 85

88 NOTES TO THE FINANCIAL REPORT for the year ended 31 December INVESTMENT PROPERTY (continued) AMOUNTS RECOGNISED IN PROFIT OR LOSS FOR THE YEAR Rental income from investment property 18 - Direct operating expenses from rental generating property (14) INTANGIBLE ASSETS 4 - ACCUMULATED COST AMORTISATION CARRYING VALUE ACCUMULATED COST AMORTISATION CARRYING VALUE Goodwill IT development and software (4 288) (35) 7 TOTAL (4 288) (35) 7 86

89 NOTES TO THE FINANCIAL REPORT for the year ended 31 December INTANGIBLE ASSETS (continued) RECONCILIATION OF INTANGIBLE ASSETS CARRYING AMOUNT AT THE BEGINNING OF THE YEAR ACQUISITION THROUGH BUSINESS COMBINATION FOREIGN CURRENCY TRANSLATION RESERVE AMORTISATION IMPAIRMENT LOSS ADDITIONS DISPOSALS TOTAL Goodwill (979) IT development and software (3) (38) (706) (1 636) (3) (1 017) (706) (1 636) RECONCILIATION OF INTANGIBLE ASSETS CARRYING AMOUNT AT THE BEGINNING OF THE YEAR ADDITIONS RECLASSIFIED FROM PLANT AND EQUIPMENT AMORTISATION TOTAL A$' 000 IT development and software (11) 7 87

90 NOTES TO THE FINANCIAL REPORT for the year ended 31 December INTANGIBLE ASSETS (continued) IMPAIRMENT TESTING FOR CASH GENERATING UNITS CONTAINING GOODWILL The only cash generating unit with allocated goodwill is Far East Gold Special Purpose Vehicle Proprietary Limited ("FEG"). FEG is the exploration entity which is exploring and prospecting in the East Rand region. In particular, FEG acquired the assets of Megamine on 19 March 2012 and the Wit Nigel prospecting rights (PR73) which was acquired from Goliath Gold on the same date. At the time of the reverse acquisition (refer to note 11), a valuation of the business was performed and goodwill was determined to be A$ million based on the synergistic benefit of the adjacent prospecting rights to the existing Megamine exploration properties. As FEG is currently in the prospecting and exploration phase, a discounted cash flow valuation could not be performed. As at 31 December 2012, the carrying value of the entire cash generating unit of FEG including goodwill was assessed against the market value of the Goliath shares in issue. At that date there was adequate headroom over the net asset values of FEG, including goodwill, in order to conclude that no impairment was required. Furthermore, as economic indicators such as the Rand gold price have improved, this provided further evidence that goodwill was not impaired DEFERRED TAX LIABILITIES DEFERRED TAX ASSETS THE BALANCE COMPRISES TEMPORARY DIFFERENCES ATTRIBUTABLE TO: Bad debt provision Employee benefits Gold hedge obligation Property, plant and equipment Tax losses Asset retirement obligation Deferred rental provision NET DEFERRED TAX ASSETS Set-off of deferred tax liabilities pursuant to set-off provisions (21 858) (5 201) NET DEFERRED TAX ASSETS Deferred tax assets expected to be recovered within 12 months Deferred tax assets expected to be recovered after 12 months MOVEMENT IN DEFERRED TAX ASSETS Asset retirement obligation (117) (147) Bad debt provision Employee benefits Future rental provision Gold hedge obligation Property, plant and equipment (6 779) (1 502) Tax losses (199) (1 740) 88

91 NOTES TO THE FINANCIAL REPORT Note 24. DEFERRED TAX LIABILITIES (continued) DEFERRED TAX LIABILITIES THE BALANCE COMPRISES TEMPORARY DIFFERENCES ATTRIBUTABLE TO: Property, plant and equipment Acquisition of subsidiary Asset retirement investment TOTAL DEFERRED TAX LIABILITIES Set-off of deferred tax liabilities pursuant to set-off provisions (21 858) (5 201) NET DEFERRED TAX LIABILITIES Deferred tax liabilities expected to be settled within 12 months Deferred tax liabilities expected to be settled after more than 12 months MOVEMENT IN DEFERRED TAX LIABILITIES Acquisition of subsidiary (230) (850) Asset retirement investment Property, plant and equipment TRADE AND OTHER PAYABLES Trade payables Other payables FAIR VALUE These payables are short term by nature and their carrying value is deemed to approximate their fair value. 26. GOLD DERIVATIVE LIABILITIES At acquisition Delivery of gold to settle the derivative liability (45 853) - Fair value loss on derivative liability Loss on foreign exchange Effect of translation to presentation currency (2 601) GOLD DERIVATIVE LIABILITIES COMPRISE: Franco-Nevada gold derivative Forward sale agreement Less: Short term portion of derivative (30 399) - LONG TERM PORTION OF DERIVATIVE

92 NOTES TO THE FINANCIAL REPORT for the year ended 31 December GOLD DERIVATIVE LIABILITIES (continued) FRANCO-NEVADA GOLD DERIVATIVE On 05 November 2009, First Uranium signed a derivative agreement with Franco-Nevada (Barbados) Corporation ("FN"), whereby FN acquired the right to receive seven percent of the life-of mine gold production from the Ezulwini Mine (the Ezulwini Gold Stream Transaction). Under the terms of the Ezulwini Gold Stream Transaction, FN paid Ezulwini US$ million upfront. In addition, FN will make an ongoing payment equal to the lesser of US$ 400 per ounce (the Fixed Price) (subject to an annual inflation adjustment of one percent, starting in the fourth year following receipt of the first payment) and the prevailing spot price at the time of such payment for each ounce of gold delivered under the contract. The total remaining gold ounces to be delivered by the Ezulwini Mine under the current Ezulwini life of mine plan to FN has been accounted for as a financial liability which is fair valued using the Black Scholes pricing model. All cash received and cost of production relating to the delivered ounces are recognised as part of the derivative expense related to the Gold Stream Transaction along with the revaluation effects of the financial derivative liability. Pursuant to the Ezulwini Gold Stream Transaction, Ezulwini granted to FN a special bond over certain of the tailings dams and a pledge of seven percent of the gold production from the Ezulwini Mine. FN also has the right of first refusal on future gold sales transactions that might be considered at Ezulwini. The financial liability is fair valued using the Black Scholes pricing model. The following assumptions were used: 31 DECEMBER AUGUST 2012 Strike price ($/oz) Gold price ($/oz) Estimated life of mine production (oz) Month Libor rate % % Gold lease rates (12 months) % % FORWARD SALE AGREEMENT The gold derivative liability arose as a result of the mark-to-market value of the gold forward sales contracts that Gold One acquired as part of the Rand Uranium acquisition. At the date of acquisition, Rand Uranium had a commitment to deliver 154,067 ounces of gold up to June The mark-to-market value of the liability was measured as A$ million at the date of acquisition. During the year 105,371 ounces of gold were delivered into these contracts by the Cooke Underground and Randfontein Surface Operations. At 31 December 2012, the remaining commitment was ounces of gold at ZAR (A$ 1.197) per ounce to be delivered up to 28 June 2013 with a mark-to-market value of A$ million ACCRUALS Employee related payables Employee PAYE payable

93 NOTES TO THE FINANCIAL REPORT Note 28. BORROWINGS Secured Unsecured Less: Short term portion of borrowings (60 195) LONG TERM PORTION OF BORROWINGS RECONCILIATION Draw downs Finance charges on borrowings Acquisition through business combination Repayment (48 928) - Effect of translation to presentation currency (4 984) - SECURED Investec Bank Limited made available to the group facilities two loans totaling A$ million to facilitate the acquisition of Rand Uranium and Ezulwini. Repayments occur quarterly, the first being 02 July 2012 and ending on 31 December 2013 and 30 September 2016 respectively. One third of the loan is repayable by 31 December The interest on the loans are paid quarterly and charged on average at 3-month JIBAR plus 3.89% until 50% of the loan has been repaid after which interest is charged at 3-month JIBAR plus 3.25%. Investec Bank Limited loans are secured by the assets in New Kleinfontein Gold Mine and over all non-rehabilitation related cash balances in the group. The undrawn facility available at 31 December 2012 is A$ million (2011: nil). UNSECURED Baiyin Precious Metals Limited ( Baiyin ) advanced two unsecured shareholder loans totaling US$ million (A$ million) to Gold One to facilitate the acquisition of Rand Uranium and Ezulwini. These loans accrue interest at 10% and 8.5% p.a. respectively for which the interest is repayable semi annually. The principal repayment is due on 28 September The undrawn facility available at 31 December 2012 is A$ million (2011: nil). 29. PROVISIONS ASSET RETIREMENT AND REHABILITATION OBLIGATION Opening balance Adjustment to decommissioning asset Acquisition of business Unwinding of discount on asset retirement obligation Effect of translation to presentation currency (1 536) (610) Closing balance Rehabilitation costs are expected when exploration, evaluation and development activities give rise to the need for restoration. The costs include obligations relating to reclamation, waste site closure, plant closure and other costs associated with the restoration of the site. These estimates of the restoration obligation are based on current technology, legal requirements and future costs. Any changes in the estimates are adjusted on a prospective basis. In determining the restoration obligation, the entity has assumed no significant changes will occur in the relevant Australian and South African legislation in relation to restoration of such mines in the future. 91

94 NOTES TO THE FINANCIAL REPORT for the year ended 31 December PROVISIONS (continued) Key assumptions used in estimating the asset retirement and rehabilitation obligations were as follows: Discount rates - long term government bond rate 6.93% 8.10% Inflation (percentage per annum) 5.20% 6.00% Expected closure date of mines CONTRIBUTED EQUITY ISSUED Ordinary shares (see below) NUMBER OF SHARES '000 OPENING BALANCE Issue of shares Transaction costs on issue of shares (1) Exercise of share options Transaction cost on exercise of share options (1) NUMBER OF SHARES '000 OPENING BALANCE Issue of shares Transaction costs on issue of shares (8 491) Exercise of share options Transaction costs on exercise of share options (13) TERMS AND CONDITIONS OF CONTRIBUTED EQUITY Ordinary fully paid shares have the right to receive dividends as declared, and in the event of winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number and amounts paid up on shares held. UNLISTED SHARE OPTIONS At 31 December 2012 there were 41,169,326 (2011: 18,962,853) unlisted options issued by the group, which entitle the option holder, subject to the terms and conditions of the options, one ordinary fully paid share for each option held. Refer to note 39 for further detail on unlisted share options. LISTED SHARE OPTIONS At 31 December 2012 there were nil (2011: 6,537,635) listed options outstanding for the group, which entitled the option holder, subject to the terms and conditions of the option, one ordinary fully paid share for each option held. The exercise price of these options was 50 cent, with no vesting period and expired after five years on 12 October

95 NOTES TO THE FINANCIAL REPORT for the year ended 31 December CONTRIBUTED EQUITY (continued) CAPITAL MANAGEMENT The group is not subject to externally imposed capital requirements. When managing capital, management's objectives are to ensure the entity continues as a going concern and maintain a capital structure that ensure the lowest cost of capital available to the entity. As the market is constantly changing, management may change the amount of dividends to be paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt RESERVES RESERVES Share option reserve Fair value adjustment reserve Foreign currency translation reserve (90 205) (45 601) MOVEMENTS (44 098) (32 188) SHARE OPTION RESERVES Opening balance Employee share option plan Black Economic Empowerment transactions CLOSING BALANCE FOREIGN CURRENCY TRANSLATION RESERVE Opening balance (45 601) (11 816) Currency translation differences arising during the year (44 604) (33 785) CLOSING BALANCE (90 205) (45 601) FAIR VALUE ADJUSTMENT RESERVE Opening balance - - Fair value adjustment on available-for-sale investments CLOSING BALANCE NATURE AND PURPOSE OF RESERVE (a) SHARE OPTION RESERVE (i) EMPLOYEE SHARE OPTION PLAN The share option reserve is used to record the value of share based payments provided to employees and consultants, as part of the remuneration for their services. The listed share option reserve is used to record the value of options issued to parties through the raising of capital. Listed share options were exercised during the period. Refer to note 39 for further information on the number of shares issued and key assumptions. 93

96 NOTES TO THE FINANCIAL REPORT for the year ended 31 December RESERVES (continued) (ii) BLACK ECONOMIC EMPOWERMENT TRANSACTIONS During the year, the group granted a number of share options arrangements to Black Economic Empowerment ("BEE") partners in order to meet the South African Mining charter requirements of 26% black ownership by These share option arrangements will settle in the equity interest of the group's mining operations. Accordingly, all the BEE share options are considered to be equity settled in nature. MEASUREMENT OF FAIR VALUES The fair values of the share options granted through the BEE share option arrangements were measured based on the Monte Carlo valuation model. Expected volatility is estimated by considering historical volatility of similar companies over the period commensurate with the expected term. The key inputs and assumptions used in the grant date measurement of the fair values for the BEE share options were as follows: RAND URANIUM MODDER EAST GOLIATH Initial number of shares (No) Initial share price (ZAR '000) Dividend yield 1.560% 1.056% 0.000% Expected volatility (weighted average) 50% 40% 40% Interest accrued on loan to BEE party 7.480% Forecasted Prime rate Jibar % Expected life (weighted average) 5 years 10 years 10 years (b) FAIR VALUE ADJUSTMENT RESERVE The fair value adjustment reserve relates to the cumulative fair value changes, net of deferred tax, arising from the Cooke rehabilitation assets which are classified as available-for-sale financial investments (refer note 20). (c) FOREIGN CURRENCY TRANSLATION RESERVE Exchange differences arising on translation of foreign controlled entities are recognised in the consolidated statement of comprehensive income and accumulated as reserves within equity NON-CONTROLLING INTEREST INTEREST IN: Share capital Retained earnings (2 542) DIVIDENDS PAID During the financial year, A$ nil has been paid or declared (2011: A$ nil)

97 NOTES TO THE FINANCIAL REPORT for the year ended 31 December RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES Profit for the year ADJUSTMENTS FOR: Black Economic Empowerment transactions Delivery of gold to settle the derivative liability (45 853) - Depreciation and amortisation Fair value adjustments (7 049) Foreign exchange loss on gold derivative Gain on bargain purchase ( ) - Gain on foreign exchange transactions (5 362) (34) Held-to-maturity investment income (75) - Impairment of assets Increase in deferred tax liabilities Increase in income tax (3 819) - Loss on sale of assets Notional interest on provisions Share based payment expense CHANGES IN WORKING CAPITAL: Acquisition through business combination (19 407) - Increase in inventories (8 696) (5 775) Increase in trade and other receivables (5 681) (1 361) Increase in trade and other payables CONVERTIBLE BONDS (20 954) Financial liabilities consist of convertible bonds classified as financial liabilities at fair value through profit or loss. RECONCILIATION OF CONVERTIBLE BONDS Opening balance Effect of translation to presentation currency Fair value gain (US$ denominated bonds) - (7 049) Conversion of bond options - (59 703) - - In 2007, % convertible bonds were issued by Gold One Africa at a nominal value of R1 million per bond. As a result of the reverse acquisition arrangement in 2009 whereby Gold One Africa (formerly Aflease Gold Limited) was acquired by Gold One, the original bonds issued were replaced on 25 May 2009 with % convertible bonds at a total nominal value of US$ million. The bonds were to mature in December 2012, 5 years from the original issue date at the redemption value of 109.6% of the nominal value unless converted into the group's ordinary shares at the holder's option, at any time during the conversion period. All or some of the bonds could have been converted at fixed rate of 314,026 shares per bond. The bondholders had the option to put the bonds to the group at the accreted principal plus accrued interest on 12 December 2010, being the third anniversary of the closing date. The bondholders elected not to exercise their put option. During 2011 all of the remaining bonds were converted which resulted in the exercise of 170,758,534 shares. 95

98 NOTES TO THE FINANCIAL REPORT for the year ended 31 December COMMITMENTS GUARANTEES, CAPITAL AND OPERATING LEASE COMMITMENTS Guarantees Capital commitments - Contracted Operating lease commitments GUARANTEES Department of Mineral Resources Eskom Office rental The guarantees relate to performance bank and insurance guarantees provided to the Department of Mineral Resources for environmental rehabilitation, as well as performance guarantees to Eskom for energy. CAPITAL COMMITMENTS The capital commitments relate to contracted capital expenditure for the 2013 financial reporting period. Capital commitments will be funded out of the group's own cash flows and debt financing. OPERATING LEASES The future aggregate minimum lease payment under non-cancellable operating leases are: Within one year In second to fifth year inclusive Later than five years The operating lease commitments relate to the leases for the farm Cloverfield, 55 Empire Road, Constantia Park offices and Australian offices. No contingent rent is payable. 96

99 NOTES TO THE FINANCIAL REPORT for the year ended 31 December RELATED PARTIES RELATIONSHIPS Directors Goliath Gold Mining Limited directors Refer to the Directors' Report Keith Rayner Jerry Vilakazi Piet Nel SUBSIDIARIES Gold One Africa Limited Twin Hills Operations Pty Limited Australian Silicon Operations Pty Limited Gold One Mozambique Limitada Etendeka Prospecting and Mining Company Proprietary Limited New Kleinfontein Mining Company Limited New Kleinfontein Goldmine Proprietary Limited New Kleinfontein Gold Claims Proprietary Limited New Kleinfontein Rehabilitation Trust Gold One International Limited Share Incentive Scheme Cooke Rehabilitation Trust Gold One Asia Limited Gold One Asia Management Limited Far East Gold SPV Proprietary Limited Newshelf 1186 Proprietary Limited Newshelf 1201 Proprietary Limited Consolidated Resources and Exploration Limited Guild Hall No. 22 Proprietary Limited IEN Investments Proprietary Limited Brakfontein Diamante Proprietary Limited Witnigel Investments Proprietary Limited Newlands Minerals Proprietary Limited Goliath Gold Mining Limited Goliath Gold Share Incentive Scheme Newshelf 1114 Proprietary Limited Rand Uranium Proprietary Limited Newshelf 1198 Proprietary Limited Gold One Europe Limited Ezulwini Mining Company Proprietary Limited ULTIMATE CONTROLLING INTEREST COUNTRY OF INCORPORATION South Africa Australia Australia Mozambique Namibia South Africa South Africa South Africa South Africa South Africa South Africa South Africa British Virgin Isles British Virgin Isles South Africa South Africa South Africa South Africa South Africa South Africa South Africa South Africa South Africa South Africa South Africa South Africa South Africa Cyprus South Africa EQUITY INTEREST 2012 % 2011 % The ultimate controlling interest is held by BCX Gold Investment Holdings Limited ("BCX"), a company incorporated in the British Virgin Islands) which at 31 December 2012 owned 89.17% (2011: 89.17%) of the issued ordinary shares of Gold One. The ultimate holders of BCX are as follows: Baiyin Non-Ferrous Group Company Limited Baiyin Precious Metal Investment Limited China-Africa Development Fund China-Africa Gold Investment Company Limited China Development Bank Corporation Long March Capital management Limited CITIC Kingview Capital Management Company Limited CX Elements Investments Limited CX Gold Investment Holdings Limited INCORPORATED IN China British Virgin Islands China China China China China British Virgin Islands British Virgin Islands 97

100 NOTES TO THE FINANCIAL REPORT for the year ended 31 December RELATED PARTIES (continued) ADVISORY SERVICES Advisory services of A$ 712,139 (2011: A$ 3,812,396) were provided by Long March Capital Management Limited. Rates were based on arm's length transactions and no amount was outstanding at 31 December KEY MANAGEMENT PERSONNEL For details on remuneration and other benefits paid to key management personnel, please refer to note 38. MANAGEMENT SERVICES Management services amounting to A$ nil (2011: A$ million) were charged to general expense and administrative costs of A$ nil (2011: A$ million) were paid on behalf of Goliath Mining Limited. Rates were based on arm's length transactions and an amount of A$ nil (2011: A$ million) was outstanding at 31 December No interest was charged on the loan balance. PRINTING AND POSTAGE Printing and postage services amounting to A$ nil (2011: A$ 45,459) were provided to Baiyin Precious Metals Investment Ltd. Rates were based on arm's length transactions and no amount was outstanding at 31 December SHAREHOLDER'S LOAN For details on the shareholder's loan, please refer to note 28. TRAVELLING Travel services of A$ 64,370 (2011: A$ 6,617) were provided by Long March Capital Management Limited. Rates were based on arm's length transactions and no amount was outstanding at 31 December Travel services of A$ 7,766 (2011: A$ nil) were provided to Baiyian Precious Metals Investments Limited. Rates were based on arm's length transactions and no amount was outstanding at 31 December Travel costs of A$ nil (2011: A$ 29,611) were reimbursed by Uranium One Incorporated in 2011, of which M K Wheatley was a director. Rates were based on arm's length transactions and no amount was outstanding at 31 December Travel costs of A$ nil (2011: A$ 2,796) were reimbursed to Norton Gold Fields, of which M K Wheatley was a director. Rates were based on arm's length transactions and no amount was outstanding at 31 December Travel for the board on company business is co-ordinated with other directorships, where schedules allow. This allows the expenses to be shared by those companies and results in cost savings for Gold One. Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated 98

101 NOTES TO THE FINANCIAL REPORT for the year ended 31 December KEY MANAGEMENT PERSONNEL DISCLOSURE EXECUTIVE DIRECTORS SHORT-TERM SALARY AND/ OR FEES A$ RETENTION BONUS A$ PERFOR- MANCE BONUS A$ SHARE BASED PAYMENTS EQUITY OPTIONS* A$ TOTAL A$ 2012 N J Froneman - Chief Executive Officer C D Chadwick - Chief Financial Officer SHORT-TERM SALARY AND/ OR FEES A$ RETENTION BONUS A$ PERFOR- MANCE BONUS A$ SHARE BASED PAYMENTS EQUITY OPTIONS* A$ TOTAL A$ 2011 N J Froneman - Chief Executive Officer C D Chadwick - Chief Financial Officer NON-EXECUTIVE SHORT-TERM SALARY AND/ OR FEES A$ RETENTION/ PERFOR- MANCE BONUS A$ POST EMPLOY- MENT SUPER- ANNUATION A$ SHARE BASED PAYMENTS EQUITY OPTIONS* A$ TOTAL A$ 2012 M K Wheatley (resigned 30 December 2012) B E Davison (resigned 30 December 2012) K V Dicks (resigned 29 February 2012) W B Harris (resigned 29 February 2012) S Swana (resigned 29 February 2012) K J Winters (resigned 30 December 2012) Y Sun (appointed 1 March 2012) M H Solomon (appointed 01 March 2012) A H Liu (appointed 01 March 2012) R T L Chan (appointed 01 March 2012) M Liao (appointed 01 March 2012, resigned - 30 December 2012) C Zhou (appointed 01 March 2012) SHORT-TERM SALARY AND/ OR FEES A$ RETENTION/ PERFOR- MANCE BONUS A$ POST EMPLOY- MENT SUPER- ANNUATION A$ SHARE BASED PAYMENTS EQUITY OPTIONS* A$ TOTAL A$ 2011 M K Wheatley B E Davison K V Dicks W B Harris S Swana K J Winters No termination benefits were paid to executives or key management personnel during the year ended 31 December

102 NOTES TO THE FINANCIAL REPORT for the year ended 31 December KEY MANAGEMENT PERSONNEL DISCLOSURE (continued) Other key management personnel SHORT-TERM SALARY AND/ OR FEES A$ RETENTION BONUS A$ PERFOR- MANCE BONUS A$ SHARE BASED PAYMENTS EQUITY OPTIONS* A$ TOTAL A$ 2012 I J Marais S J M Caddy (resigned 05 October 2012) R A Stewart R H A Plaistowe P B Kruger - Company Secretary W D R Robinson SHORT-TERM SALARY AND/ OR FEES A$ RETENTION BONUS A$ PERFOR- MANCE BONUS A$ SHARE BASED PAYMENTS EQUITY OPTIONS* A$ TOTAL A$ 2011 I J Marais S J M Caddy R A Stewart R H A Plaistowe P B Kruger - Company Secretary TOTAL DIRECTORS' AND EXECUTIVE REMUNERATION SHORT-TERM SALARY AND/ OR FEES A$ RETENTION BONUS A$ PERFOR- MANCE BONUS A$ POST EMPLOY- MENT SUPER- ANNUATION A$ SHARE BASED PAYMENTS EQUITY OPTIONS* A$ TOTAL A$ * Share based payments equity options issued during the year relate to the Goliath share option scheme. No other share options were issued during the year to key management personnel or directors. 100

103 NOTES TO THE FINANCIAL REPORT for the year ended 31 December KEY MANAGEMENT PERSONNEL DISCLOSURE (continued) NUMBER OF SHARES The number of shares in the company held during the financial year by each director of Gold One and other key management personnel of the group, including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation. OPENING BALANCE SHARES ACQUIRED ON OPEN MARKET ON EXERCISE OF OPTIONS RESIGNED/ RETIRED CLOSING BALANCE 2012 EXECUTIVE DIRECTORS N J Froneman ( ) - C D Chadwick NON-EXECUTIVE DIRECTORS M K Wheatley ( ) - B E Davison ( ) - K V Dicks ( ) - S Swana (50 000) - K J Winters ( ) - OTHER KEY MANAGEMENT PERSONNEL I J Marais S J M Caddy R A Stewart P B Kruger OPENING BALANCE SHARES ACQUIRED ON OPEN MARKET ON EXERCISE OF OPTIONS SHARE OPTIONS DISPOSED CLOSING BALANCE 2011 EXECUTIVE DIRECTORS N J Froneman ( ) C D Chadwick ( ) - NON-EXECUTIVE DIRECTORS M K Wheatley ( ) B E Davison ( ) K V Dicks ( ) W B Harris ( ) - S Swana ( ) K J Winters ( ) OTHER KEY MANAGEMENT PERSONNEL I J Marais ( ) S J M Caddy ( ) - R A Stewart ( ) - P B Kruger ( )

104 NOTES TO THE FINANCIAL REPORT for the year ended 31 December KEY MANAGEMENT PERSONNEL DISCLOSURE (continued) NUMBER OF OPTIONS The number of options over ordinary shares in the company held during the financial year by each director of Gold One and other key management personnel of the group, including their personally related parties, are set below. On 3 August 2011, BCX, representing a consortium of Chinese investors, lodged a bidder's statement in respect of a takeover proposal to obtain a majority ownership holding in Gold One. This had the effect of causing all unvested options to vest and become exercisable immediately at that date. OPENING BALANCE RESIGNED/ RETIRED VESTED AND EXERCISABLE AT 31 DECEMBER CLOSING BALANCE EXERCISED EXECUTIVE DIRECTORS N J Froneman ( ) C D Chadwick NON-EXECUTIVE DIRECTORS M K Wheatley ( ) K J Winters ( ) OTHER KEY MANAGEMENT PERSONNEL I J Marais ( ) S J M Caddy ( ) R A Stewart P B Kruger OPENING BALANCE EXERCISED/ EXPIRED VESTED AND EXERCISABLE AT 31 DECEMBER CLOSING BALANCE EXECUTIVE DIRECTORS N J Froneman ( ) C D Chadwick ( ) NON-EXECUTIVE DIRECTORS M K Wheatley ( ) B E Davison ( ) K V Dicks ( ) W B Harris ( ) S Swana ( ) K J Winters ( ) OTHER KEY MANAGEMENT PERSONNEL I J Marais ( ) S J M Caddy ( ) R A Stewart ( ) P B Kruger ( ) All options have vested at 31 December The elements of emoluments have been determined based on a cost to the company. Key management personnel are those directly accountable and responsible for the operational management and strategic direction of the company. Emoluments of key management personnel (other than options and retention bonuses) are related to the performance of the company. 102

105 NOTES TO THE FINANCIAL REPORT for the year ended 31 December SHARE BASED PAYMENTS Share options on issue to key management personnel and employees of the group at 31 December 2012: OPENING BALANCE (SHARE OPTIONS) GRANTED DURING THE YEAR REPLACED/ EXPIRED/ FORFEITED/ MODIFIED CLOSING BALANCE (SHARE OPTIONS) GRANT EXPIRY EXERCISE DATE DATE PRICE EXERCISED 12/11/ /11/2012 R ( ) /03/ /03/2013 A$ /03/ /03/2013 A$ /06/ /06/2013 R /06/ /06/2013 R /07/ /07/2013 A$ /08/ /08/2013 R /12/ /12/2013 R (2 899) /01/ /01/2014 A$ /02/ /02/2014 R /10/ /10/2014 R /12/ /12/2014 R (47 101) /01/ /01/2015 R /03/ /03/2015 R /05/ /05/2015 R /05/ /05/2015 A$ /07/ /07/2015 R (29 000) /09/ /09/2015 R /11/ /11/2015 R /02/ /02/2017 A$ /02/ /02/2017 R ( ) /05/ /05/2012 R ( ) /09/ /09/2017 R ( ) ( ) Share options have been granted as an incentive component in the remuneration arrangements for senior executives and managers. The contractual life of each option granted is 3 to 5 years and the market price of the options is set at the market price of the shares at the grant date. There are no cash settlement alternatives. No option holder has any right under the options to participate in any other share issue of the company unless the option holder exercises that option and becomes the holder of Gold One shares prior to the record date for the issue of the shares. Share options held under the Aflease Group share option schemes were cancelled and re-issued under Replacement Option Terms. Share options held under the BMA Gold share option scheme were unaffected. New share options are issued under the Gold One International Limited Share Incentive Scheme approved by shareholders on 26 August FAIR VALUE OF OPTIONS GRANTED The assessed fair value at grant date of options granted during the year ended 31 December 2012 was A$ cents per option (2011: nil). The fair value at grant date is independently determined using a Binomial option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The expected volatility is based on an annualised standard deviation of daily return over the last 90 consecutive days ("90-day volatility"). The volatilities used were estimated using share price data that was independently sourced. 103

106 NOTES TO THE FINANCIAL REPORT for the year ended 31 December SHARE BASED PAYMENTS (continued) The model inputs for the South African options granted during the year to 31 December included: JSE Share price at grant date Quoted market price Quoted market price Expected forfeiture and early exercise 0% 0% Expected volatility Between 29.46% and 50.07% 67% Expected dividends nil nil Risk-free interest rate GOLIATH GOLD MINING INCENTIVE SCHEME Zero coupon swap curve as at the date of issue ASX Zero coupon swap curve as at the date of issue GRANT EXPIRY EXERCISE OPENING BALANCE (SHARE GRANTED DURING THE REPLACED/ EXPIRED/ FORFEITED/ CLOSING BALANCE (SHARE DATE DATE PRICE OPTIONS) YEAR EXERCISED MODIFIED OPTIONS) 13/12/ /13/2017 R FAIR VALUE OF OPTIONS GRANTED The assessed fair value at grant date of options granted during the year ended 31 December 2012 was ZAR per option (2011: nil). The fair value at grant date is independently determined using a Binomial option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the terms of the option. The expected volatility is based on an annualised standard deviation of daily return over the last 90 consecutive days ("90-day volatility"). The volatilities used were estimated using share price data that was independently sourced. The model inputs for the options granted during the year to 31 December included: JSE Share price at grant date Quoted market price Expected forfeiture and early exercise 0% Expected volatility 98.08% Expected dividends nil Risk-free interest rate Zero coupon swap curve as at the date of issue 104

107 NOTES TO THE FINANCIAL REPORT for the year ended 31 December EVENTS AFTER THE REPORTING PERIOD The directors are not aware of any matter or circumstance arising since the end of the financial year. 41. PARENT ENTITY FINANCIAL INFORMATION The individual consolidated financial statements for the parent entity show the following aggregate amounts: STATEMENT OF FINANCIAL POSITION 2012 A$' A$'000 Current assets Total assets Current liabilities Total liabilities SHAREHOLDERS' EQUITY Issued capital RESERVES Share based payment reserve Translation reserve (29 939) Accumulated loss ( ) ( ) NET ASSETS (LOSS)/PROFIT FOR THE YEAR (25 307) TOTAL COMPREHENSIVE (LOSS)/PROFIT FOR THE YEAR (25 307) GUARANTEES ENTERED INTO BY THE PARENT ENTITY No guarantees were entered into by the parent entity. CONTINGENT LIABILITIES OF THE PARENT ENTITY There were no contingent liabilities for the parent entity for the year under review. CONTRACTUAL COMMITMENTS OF THE ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT No contractual commitments were entered into by the parent entity. 105

108 Directors Declaration In the opinion of the directors of Gold One International Limited: (a) The financial statements and notes, set out on pages 44 to 105, of the consolidated entity, are in accordance with the Corporations Act 2001 (Cth), including: (i) Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements (ii) Giving a true and fair view of the consolidated entity s financial position as at 31 December 2012 and of its performance for the financial year ended on that date (b) There are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable (c) At the date of this declaration there are reasonable grounds to believe that the members of the extended closed group, identified in note 37, will be able to meet any obligations or liabilities to which they are, or may become, committed to. Note 1 confirms that the financial statements also comply with International Financial Reporting Standards, as issued by the International Accounting Standards Board. The directors have been given the declarations by the CFO and Acting CEO, required by section 295A of the Corporations Act 2001 (Cth). This declaration is made in respect of Gold One International Limited and the entities it controlled during the year and is made in accordance with a resolution of the directors. On behalf of the board Christopher Chadwick (CFO and acting CEO) 27 February 2013 Johannesburg, South Africa 106

109 Directors' Declaration 107

110 108

111 Independent Auditor's Report 109

112 Shareholder Information The shareholder information set out below was applicable at 31 January A. Distribution of equity securities Shares and over B. Equity security holders The names of the 20 largest holders of quoted equity securities are listed below: Name Number of shares Percentage of Issued shares BCX Gold Investment Holdings % National Nominees Limited % HSBC Custody Nominees % JP Morgan Nominees Australia % Citicorp Nominees Pty Limited % BNP Paribas Noms Pty Ltd % ABN Amro Clearing Sydney % SBG Securities (Pty) Ltd % Pershing Australia Nominees % Titan Share Dealers (Pty) Ltd % Mr Barry Erskine Davison % Mrs Linda Gregory % Mnr Ferdinand Hugo Van Zyl % 110

113 Shareholder Information Name Number of shares Percentage of Issued shares Mr & Mrs Dianne Fay & Clemens Mary % SEB Swedish Clients % Mr Nicholas Frederick Tennant % Mr Johan Wilhelm Bruwer % Evalon Investments Pty Ltd % PSL Client Safe Custody Asset % Bernville (Pty) Limited % % Unquoted equity securities Number on Issue Number of holders Options issued under the employee plan 41,169,326* 52 * Number of unissued ordinary shares under the options C. Substantial Holders Substantial holders in the company are set out below. Name Number of shares Percentage of Issued shares BCX Gold Investment Holdings % D. Voting Rights The voting rights attaching to each class of equity securities are set out below. (a) Ordinary shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll shall have one vote. (b) Options No voting rights. 111

114 Competent Persons Statement COMPETENT PERSONS The information in this release that relates to exploration results, mineral resources or mineral (ore) reserves is based on information compiled by the following Competent Persons 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 ). The overall Competent Person for the Gold One group is 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 /04. Dr Stewart is also a fellow of the Geological Society of South Africa ( GSSA ) and is Executive Vice President: Technical Services for Gold One, with which he is a full-time employee, and has 13 years experience relevant to the style of mineralisation and type of deposits under consideration, and to the activity which he is undertaking, to qualify as a Competent Person for the purposes of both the JORC Code and the SAMREC Code. The Competent Person for the Ventersburg resource is Mr Quartus Meyer, who has a master s degree in science (geology) and who is a professional natural scientist registered with SACNASP, membership number /88. Mr Meyer is Vice President: Exploration for Gold One, with which he is a full-time employee, and has 26 years experience 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 JORC Code and the SAMREC Code. The Competent Person for the Modder East Operations is Mr Evan Cook, who has a bachelor s degree in technology (geology) and who is a professional natural scientist registered with SACNASP, membership number /07. Mr Cook is also a member of the GSSA and is Mineral Resources Manager: South African Operations for Gold One, with which he is a full-time employee, and has 14 years experience 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 JORC Code and the SAMREC Code. Dr Stewart and Messrs Meyer and Cook consent to the inclusion in this release of the matters based on information compiled by themselves, Gold One employees and the companies consultants in the form and context in which they appear for the purposes of both the JORC Code and the SAMREC Code. 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 Market Announcements Platform and the Stock Exchange News Service (SENS) on 7 December 2010, (Ventersburg),