Alacer Gold Corp. Unaudited Interim Consolidated Financial Statements. March 31, 2013

Transcription

1 Unaudited Interim Consolidated Financial Statements

2 Consolidated Statements of Financial Position (unaudited) (expressed in thousands of U.S. dollars) Note March As of December Assets Current assets Cash and cash equivalents 4 254, ,258 Receivables and other 5 22,376 22,841 Inventories 6 94, , , ,066 Mineral properties and equipment, net 7 891,846 1,022,096 Deferred tax assets 10 5,399 9,807 Other assets 6,886 11, ,131 1,043,315 Assets of disposal group classified as held for sale ,742 Total assets 1,434,350 1,460,381 Liabilities Current liabilities Trade and other payables 8 140, ,605 Borrowings, current portion 9 65,012 68,880 Current income tax liabilities 10 1,544 1, , ,499 Borrowings Provisions 62,137 62,739 Other liabilities 1,709 1, , ,344 Liabilities of disposal group classified as held for sale 18 10,326 Total liabilities 280, ,344 Equity Equity attributable to owners of the parent Share capital 11 1,458,230 1,457,468 Reserves 12 42,806 40,707 Retained deficit (435,840) (439,994) 1,065,196 1,058,181 Non controlling interest in subsidiary 13 88, ,856 Total equity 1,153,352 1,167,037 Total liabilities and equity 1,434,350 1,460,381 The accompanying notes are an integral part of these consolidated financial statements. 1

3 Consolidated Statements of Profit (Loss) and Comprehensive Profit (Loss) (unaudited) (expressed in thousands of U.S. dollars) For the three months ended March 31, 2013 Note Revenues Gold sales 169, ,886 Cost of sales Production costs 91,545 77,389 Depreciation, depletion and amortization 38,286 35,439 Total cost of sales 129, ,828 Mining gross profit 39,663 69,058 Other costs Exploration and evaluation 7,155 8,841 General and administrative 9,870 10,941 Share based employee compensation costs 1,742 1,594 Foreign exchange (gain), net (708) (3,240) Finance expense/(income), net 14 1,049 (24,868) Other gain (loss), net 25 (80) Profit before income tax 20,530 75,870 Income tax expense 10 5,880 9,135 Net profit 14,650 66,735 Net profit attributable to: Owners of the corporation 4,154 53,923 Non controlling interest 13 10,496 12,812 Net profit 14,650 66,735 Other comprehensive profit: Net profit 14,650 53,923 Changes in: Currency translation adjustments 12 2,016 23,068 Unrealized gain (loss) on available for sale securities, net of tax 12 (963) 1,523 Total comprehensive profit 15,703 78,514 Total comprehensive profit attributable to: Owners of the corporation 5,207 78,514 Non controlling interest 13 10,496 12,812 Total comprehensive profit 15,703 78,514. Basic Profit per share Diluted Profit per share The accompanying notes are an integral part of these consolidated financial statements. 2

4 Consolidated Statements of Cash Flows (unaudited) (expressed in thousands of U.S. dollars) For the three months ended March 31, 2013 Note Cash provided by (used in) Operating activities Net profit for the period including discontinued operations 14,650 66,735 Non cash items: Depreciation, depletion and amortization 38,286 36,197 Unrealized foreign exchange impacts (708) (2,747) Debenture interest accretion 2,451 Share based employee compensation costs 1,742 1,594 Fair value adjustment on derivative financial instrument (27,104) Deferred taxes 10 4,463 8,177 Interest paid, net (1,319) (2,642) Income taxes paid (990) Net change in non cash working capital 17 (5,503) 6,897 50,621 89,558 Investing activities Mineral properties and equipment, net (37,304) (55,918) Contract advances and other, net (439) 31 (37,743) (55,887) Financing activities Options and units exercised, net Borrowings 9 50,000 Repayment of borrowings 9 (3,864) (43,943) Non controlling interest dividend 13 (31,196) Sale of non controlling interest 37,815 (35,060) 43,931 Increase (decrease) in cash and cash equivalents (22,182) 71,486 Cash and cash equivalents Beginning balance 277, ,565 Effect of exchange rates on changes on cash held in foreign currencies (449) 1,970 Cash and cash equivalents Ending balance 254, , The accompanying notes are an integral part of these consolidated financial statements. 3

5 Consolidated Statements of Changes in Equity (unaudited) (expressed in thousands of U.S. dollars) Attributable to owners of the parent Retained earnings (deficit) Noncontrolling interest Note Share capital Reserves Total Total Equity Balance at January 1, ,392,024 20,515 (37,735) 1,374,804 17,961 1,392,765 Profit for the period 53,923 53,923 12,812 66,735 Change in valuation availablefor sale securities, net of tax 1,523 1,523 1,523 Functional currency translations 23,068 23,068 23,068 Total comprehensive profit 24,591 53,923 78,514 12,812 91,326 Transactions with owners: Sale of non controlling interest (16,297) (16,297) 54,112 37,815 Non controlling interest dividends (6,820) (6,820) Share plans exercises 478 (419) Share based compensation expense 1,725 1,725 1,725 Total transactions with owners 478 1,306 (16,297) (14,513) 47,292 32,779 Balance at March 31, ,392,502 46,412 ( 109) 1,438,805 78,065 1,516,870 Balance at January 1, ,457,468 40,707 (439,994) 1,058, ,856 1,167,037 Profit for the period 4,154 4,154 10,496 14,650 Change in valuation availablefor sale securities, net of tax 12 (963) (963) (963) Functional currency translations 12 2,016 2,016 2,016 Total comprehensive profit 1,053 4,154 5,207 10,496 15,703 Transactions with owners: Non controlling interest dividends (31,196) (31,196) Share plans exercises (765) (3) (3) Share based compensation expense 11 1,811 1,811 1,811 Total transactions with owners 762 1, ,808 (31,196) (29,388) Balance at 1,458,230 42,806 (435,840) 1,065,196 88,156 1,153,352 The accompanying notes are an integral part of these consolidated financial statements. 4

6 1. General information Alacer Gold Corp. (the Corporation ) is a leading intermediate gold producer with a globally diversified asset portfolio, including interests in multiple operating mines which feed three regional processing facilities in Australia and Turkey. These interim consolidated financial statements of the Corporation as of and for the three months ended are comprised of the Corporation and its subsidiaries (together referred to as the "Group" and individually as "Group entities"). The Corporation is the ultimate parent. 2. Basis of presentation These unaudited interim consolidated financial statements have been prepared in accordance with International Accounting Standard ( IAS ) 34, Interim Financial Reporting. The accounting policies applied in these interim consolidated financial statements are consistent with those used in the Group s audited consolidated financial statements for the year ended December 31, There have been no changes from the accounting policies applied in the December 31, 2012 financial statements, except as disclosed in Note 3. These unaudited interim consolidated financial statements do not include all disclosures required by International Financial Reporting Standards ( IFRS ) for annual audited consolidated financial statements and accordingly should be read in conjunction with the Group s audited consolidated financial statements for the year ended December 31, 2012 prepared in accordance with IFRS as issued by the International Accounting Standards Board ( IASB ). The preparation of interim financial statements requires Management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. In Management s opinion, all adjustments considered necessary for fair presentation have been included in these financial statements. Interim results are not necessarily indicative of the results expected for the financial year. Actual annual results may differ from interim estimates. The significant judgments made by Management applied in the preparation of these unaudited interim consolidated financial statements are consistent with those applied and disclosed in the Group s audited consolidated financial statements for the year ended December 31, For a description of the Group s critical accounting estimates and assumptions, please refer to the Group s audited consolidated financial statements for the year ended December 31, These consolidated financial statements were authorized for issue by the Board of Directors on April 30,

7 3. Accounting changes a) Current year Accounting policies in effect for 2013 are noted in the Group s audited consolidated financial statements for the year ended December 31, 2012, with the exception of the following accounting policies adopted in 2013: i) IFRS 7, Financial Instruments: Disclosures ( IFRS 7 ) was amended to provide additional information about the effect or potential effect of offsetting financial assets and financial liabilities. The Group assessed its financial instruments on January 1, 2013 and determined that the adoption of IFRS 7 did not result in any changes in the disclosures of its financial instruments. ii) IFRS 10, Consolidated Financial Statements ( IFRS 10 ) and IFRS 12, Disclosure of Interests in Other Entities ( IFRS 12 ) replace IAS 27, Consolidated and Separate Financial Statements and SIC 12, Consolidation Special Purpose Entities and provide guidance on the consolidation model, which identifies the elements of control. These standards provide a comprehensive standard on disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. The Group assessed its consolidation conclusions on January 1, 2013 and determined that the adoption of IFRS 10 did not result in any change in the consolidation status of any of its subsidiaries and investees. See item iv) below for the impacts to the Group of IFRS 12. iii) IFRS 11, Joint Arrangements ( IFRS 11 ) supersedes IAS 31, Interests in Joint Ventures and SIC 13, Jointly Controlled Entities, to establish principles for financial reporting by parties to a joint arrangement. The new standard defines two types of arrangements: Joint Operations and Joint Ventures. Focus is on the rights and obligations of the parties involved to reflect the joint arrangement, thereby requiring parties to recognize the individual assets and liabilities to which they have rights or for which they are responsible, even if the joint arrangement operates in a separate legal entity. The Group has reclassified its involvement with Kartaltepe Madencilik Sanayi Ticaret Anonim Şirketi ( Kartaltepe ), Polimetal Madencilik Sanayi Ticaret Anonim Şirketi ( Polimetal ), and Tunçpınar Madencilik Sanayi Ve Ticaret Anonim Şirketi ( Tunçpınar ) from jointly controlled entities to joint ventures. The Group s interests in Kartaltepe, Polimetal, and Tunçpınar were previously accounted for using the proportionate consolidation method and now are being accounted for using the equity method of accounting. As a result of this change in accounting, the investments in Kartaltepe, Polimetal, and Tunçpınar as at January 1, 2013 has been recognized at the net carrying amount of the assets and liabilities of Kartaltepe, Polimetal, and Tunçpınar previously proportionately consolidated by the Group. The Group assessed whether the investment was impaired as at January 1, 2013 and determined no impairment existed. Subsequent to January 1, 2013, the Group has accounted for its investment using the equity method of accounting. 6

8 In addition, the Group assessed its 49% ownership of Frog s Leg joint arrangement and determined that the adoption of IFRS 11 did not result in any change in the consolidation status. iv) IFRS 12 creates a comprehensive disclosure standard to address the requirements for subsidiaries, joint arrangements and associates including the reporting entity s involvement with other entities. It also includes the requirements for unconsolidated structured entities (i.e. special purpose entities). As discussed above, upon adoption of IFRS 11 the Group has reclassified its involvement with Kartaltepe, Polimetal, and Tunçpınar from jointly controlled entities to joint ventures. The Group s interests in Kartaltepe, Polimetal, and Tunçpınar were previously accounted for using the proportionate consolidation method and now are being accounted for using the equity method of accounting. These joint ventures were created to form a strategic relationship and outlined a structure for cooperation and cross investment to jointly explore and develop other mineral properties in Turkey on a 50/50 basis. The joint ventures are not material to the Group individually, nor in aggregate. v) IFRS 13, Fair Value Measurement ( IFRS 13 ) sets out a single IFRS framework for measuring fair value and requires disclosures about fair value measurements. The Group assessed its financial instruments on January 1, 2013 and determined that the adoption of IFRS 13 did not result in any significant changes in the disclosures of its financial instruments. vi) IAS 27, Separate Financial Statements ( IAS 27 ) aligns with the new consolidation guidance prescribed in IFRS 10 as it applies to investments in subsidiaries, joint ventures and associates when an entity either elects or is required by local regulations to prepare separate financial statements in accordance with IFRS. The Group assessed its financial instruments on January 1, 2013 and determined that the adoption of IAS 27 did not result in any changes in the disclosures of its financial instruments. vii) IAS 28, Investments in Associates and Joint Ventures ( IAS 28 ) was amended as a consequence of the issue of IFRS 10, IFRS 11, and IFRS 12. IAS 28 provides the accounting guidance for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. As result of the adoption of IFRS 11, The Group s interests in Kartaltepe, Polimetal, and Tunçpınar were previously accounted for using the proportionate consolidation method and now are being accounted for using the equity method of accounting. However, the joint ventures are not material to the Group individually, nor in aggregate. viii) In October 2011, the IASB issued International Financial Reporting Interpretations Committee ( IFRIC ) 20, Stripping Costs in the Production Phase of a Surface Mine ( IFRIC 20 ). IFRIC 20 provides guidance on the accounting for the costs of stripping activity in the production phase of surface mining when two benefits accrue to the entity from the stripping activity: a) useable ore that can be used to produce inventory; and b) improved access to further quantities of material that will be mined in future periods. The Group applied IFRIC 20 starting January 1, 2013 and amended its accounting policy on production phase stripping costs to require its open pit mines to consider components of the pit in their assessment of whether or not a future benefit has been created by the mining activities in the period. Based on the Group s analysis, approximately 15.4 million of the deferred stripping cost accumulated in 2012 at the Manganese open pit in Turkey has been identified as having future benefit; therefore this amount has been reclassified to mineral properties and equipment from inventory as of 7

9 December 31, As such, the Group adjusted previously reported December 31, 2012 balances in Consolidated Statement of Financial Position as follows: Previously reported December As of Restated December Inventories 132, ,967 Total Current Assets 432, ,066 Mineral Properties and Equipment, net 1,006,744 1,022,096 Total Noncurrent Assets 1,027,963 1,043,315 There was no impact on Consolidated Statement of Profit (Loss), as the deferred stripping cost had not been charged to the income during 2012 period, hence prior year retained deficit did not need to be adjusted. The reclassified deferred stripping asset has not been amortized either, as the production from the identified ore body volume has not started. 4. Cash and cash equivalents Mar 31 Dec Cash at banks and on hand 88, ,017 Short term deposits 10,426 10,384 Money market funds and other 156, , , ,258 Cash and cash equivalents earn interest based on market rates applicable to each form of interest bearing instrument. Cash is deposited at reputable financial institutions. The fair value of cash and cash equivalents equates to the values as disclosed in this note. 5. Receivables and other Mar 31 Dec Consumption taxes recoverable 12,920 12,335 Current portion contract advances 4,468 3,718 Prepaid expenses 3,390 4,909 Other current assets 1,598 1,879 22,376 22,841 8

10 6. Inventories Mar 31 Dec Finished goods 9,748 14,692 Work in process 1 61,692 64,990 Ore stockpiles 11,574 20,243 Supplies and other 11,460 17,042 94, ,967 1 December 31, 2012 balance was restated due to the adoption of the new accounting pronouncement (see Note 3a (viii) for additional information). During Q1 2013, The Corporation recorded provisions of 8 million to reduce inventory to net realizable value, reflecting changes in economic factors that impacted inventory value at Australian Business Unit. Net realizable value is determined with reference to relevant market prices less applicable variable selling expenses. Provisions recorded also reflect an estimate of the remaining costs of completion to bring the inventory into its saleable form. Provisions may be reversed in future to reflect any subsequent recoveries in net realizable value where the inventory is still on hand. 7. Mineral properties and equipment, net Mineral Mining plant Non producing properties 1 and equipment properties 2 Total Balance at December 31, , , ,989 1,022,096 Balance at 349, , , ,846 1 Mineral properties represents assets subject to depreciation including production stage properties, acquired mineral reserves, capitalized mine development costs, and capitalized pre production stripping. December 31, 2012 balance was restated due to the adoption of the new accounting pronouncement (see Note 3a (viii) for additional information). 2 Non producing properties includes construction in progress, capital projects and acquired mineral resources and capitalized exploration. During the three month period ended, the Group recorded an increase in total mineral properties and equipment of approximately 2,954, related to translation of Australian assets for presentation currency purposes. As discussed in Note 18 below, the Corporation s interest in the assets of the Frog s Leg Mine joint venture has been presented separately as held for sale in the consolidated statement of position as of March 31, Mineral properties and equipment (net) components for Frog s Leg Mine joint venture as of March 31, 2013, were as follows: (1) Mineral properties of 134,455; (2) Mining Plant and equipment of 9,806; and Non producing properties of 1,661. 9

11 8. Trade and other payables Mar 31 Dec Trade payables and accruals 138, ,733 Withholding taxes and other 1,907 2, , , Borrowings Mar 31 Dec Current Bank borrowings 60,784 63,463 Lease liabilities 4,228 5,417 65,012 68,880 Non current Lease liabilities Total borrowings 65,098 69, Income tax expense For the three months ended For the three months ended March 31, 2012 Current 1,417 1,163 Deferred 4,463 7,972 Income tax expense 5,880 9,135 On an interim basis, income tax expense is recognized based on Management s estimate of the corporate annual income tax rate expected for the full financial year applied to the pre tax income (loss) of the interim period. 10

12 11. Share capital and share based payments a) Share capital Note Number of Shares Common Shares Amount Balance at December 31, ,317,456 1,457,468 Shares issued: On exercise of share based awards 11b 98, Balance at 288,415,475 1,458,230 b) Share based payments i) Restricted share unit ( RSU ) plan Number of RSU s RSU s Weighted average grant price Outstanding December 31, ,824, Granted 114, Forfeited (90,138) (7.77) Vested and redeemed (98,019) (7.70) Outstanding 2,751, Reserves Functional currency translations Sharebased payments Availablefor sale investments Total Balance at December 31, ,880 18, ,707 Subsidiary translation to U.S. dollar 2,016 2,016 Share based award exercises ( 765) ( 765) Share based compensation expense 1,811 1,811 Change in fair values (963) (963) Balance at 23,896 19,846 ( 936) 42,806 11

13 13. Group entities Non controlling interest represents 20% of the interest of Lidya Madencilik A.Ş. ( Lidya Mining ) in Anagold Madencilik Sanayi Ve Ticaret Anonim Şirketi ( Anagold ), based on investment amounts adjusted for its share of profit or losses, as follows: For the three months ended For the three months ended March 31, 2012 Non controlling interest, beginning of period 108,856 17,961 Lidya Mining share of Anagold dividends (31,196) (6,820) Additional interest purchased 54,112 Share of profit in Anagold 10,496 12,812 Non controlling interest, end of period 88,156 78, Finance (income) expense, net For the three months ended March 31, 2012 Interest expense 1,256 5,973 Change in debenture option valuation (27,104) Unwinding of environmental rehabilitation provision discount Interest income and other ( 561) (4,466) Finance (income) expense, net 1,049 (24,868) 15. Profit per share Profit (loss) per share is calculated by dividing the profit (loss) attributable to equity holders of the Corporation by the weighted average number of ordinary shares outstanding during the period. For the three months ended March March Profit attributable to equity holders of the Corporation 4,154 53,923 Weighted average number of shares outstanding 288,330, ,437,816 Weighted average number of shares outstanding diluted 292,025, ,472,001 12

14 16. Segment information During the periods ended and 2012, the Group operated in two operating and geographic segments directed towards the acquisition, exploration and production of gold. Management has determined the operating segments based on the reports reviewed by the chief operating decision maker (the chief executive officer) that are used to make strategic decisions. Australian Business Unit Turkish Business Unit Corporate and other Three months ended : Revenues 78,957 90, ,494 Production costs 66,992 24,553 91,545 Depreciation, depletion, amortization 30,790 7,496 38,286 Mining gross profit (loss) (18,825) 58,488 39,663 Exploration and evaluation 7,155 7,155 Administration, finance and other, net 4,173 2,834 4,971 11,978 Income tax expense (benefit) (319) 6,199 5,880 Net profit (loss) for the period (29,834) 49,455 (4,971) 14,650 Total Three months ended March 31, 2012: Revenues 98,012 83, ,886 Production costs 61,808 15,581 77,389 Depreciation, depletion, amortization 30,586 4,853 35,439 Mining gross profit 5,618 63,440 69,058 Exploration and evaluation 8, ,841 Administration, finance and other costs 44 1,274 (16,971) (15,653) Income tax expense (benefit) ( 784) 9,919 9,135 Net profit (loss) for the period (1,784) 51,548 16,971 66,735 13

15 Australian Business Unit Turkish Business Unit Corporate and other As of : Current assets 97, ,598 5, ,477 Non current assets 590, ,880 39, ,131 Assets of disposal group classified as held for sale 1 158, ,742 Total assets 847, ,478 44,736 1,434,350 Current liabilities 106,788 37,886 62, ,740 Non current liabilities 48,430 15, ,932 Liabilities of disposal group classified as held for sale 1 10,326 10,326 Total liabilities 165,544 53,166 62, ,998 As of December 31, 2012: Current assets 2 146, ,238 8, ,066 Non current assets 2 731, ,232 40,792 1,043,315 Total assets 878, ,786 49,267 1,460,381 Current liabilities 116,763 49,839 61, ,499 Non current liabilities 49,921 14, ,845 Total liabilities 166,684 64,475 62, ,344 1 See Note 18 for further details of assets and liabilities held for sale 2 The balance was restated due to the adoption of the new accounting pronouncement (see Note 3a (viii) for additional information. Total 17. Net change in non cash working capital For the three months ended March 31, 2012 Cash flows arising from changes in: Trade and other payables (20,200) 5,431 Receivables and other 460 3,253 Inventories 17,677 (4,090) Other (3,440) 2,303 (5,503) 6,897 14

16 18. Non current assets held for sale and discontinued operations On February 10, 2013, the Corporation announced that it had entered into a binding asset sale and purchase agreement with La Mancha Resources Australia Pty Limited ( La Mancha ) for the sale of its 49% minority interest in the Frog s Leg Mine joint venture, its 24.5% interest in the Lake Greta joint venture, and its 40% interest in the Avoca joint venture (collectively, Frog s Leg ) and agreed to an interdependent 18 month toll treatment agreement (the Toll Treatment Agreement ) for total proceeds of approximately A166 million. As discussed in Note 19, the sale of Frog s Leg closed on April 5, Non current assets are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. The Corporation s interest in the significant assets and liabilities of the Frog s Leg Mine joint venture has been presented separately as held for sale in the consolidated statement of financial position as of. Mar Assets of disposal group classified as held for sale Cash and cash equivalents 382 Receivables and other 4,034 Inventories 8,404 Mineral properties and equipment, net 145, ,742 Liabilities of disposal group classified as held for sale Trade and other payables 7,334 Borrowings, current portion 877 Borrowings 298 Provisions 1,817 10,326 Net assets held for sale 1 148,416 1 The value of net assets held for sale in Australian dollars is approximately A142.4 million. In accordance of the terms of Toll Treatment Agreement, La Mancha will pay the Corporation A25.5 million in six equal, advance quarterly payments ending on April 1, These payments are netted against production cost in the consolidated statement of profit. In addition, certain amounts are payable for variable costs based on the actual use of certain key consumable items at the Jubilee processing facility. The terms of the agreement requires 345 days of processing capacity to be provided to La Mancha over the 18 month agreement period. 15

17 19. Subsequent events a) Sale of Frog s Leg Joint Ventures On April 5, 2013, the Corporation closed the asset sale and purchase agreement with La Mancha for the sale of Frog s Leg with the economic interest in the assets becoming attributable to La Mancha as of January 1, Under the terms of the sale agreement total proceeds of A143.5 million (approximately US149.6 million) will be received. On April 5, 2013, the Corporation received A138.5 million, which includes A2.6 million of interest accrued on the purchase price from January 1, 2013 to April 4, The remaining A5.0 million is deferred consideration of which A2.5 million has been received and the remaining A2.5 million will be received in two installments of A1.25 million on July 1, 2013 and October 1, The Corporation had one outstanding revolving credit facility as of held by Avoca Resources Limited ( ARL ) with a balance outstanding of A50 million. This amount was fully repaid on April 5, 2013 using proceeds from the Frog s Leg sale. b) Distribution to shareholders On April 10, 2013, Alacer Gold announced that its Board of Directors had declared a special cash dividend (the Special Cash Dividend ) of US0.24 per share (approximately US70 million) payable on April 30, 2013, in connection with the sale of Frog s Leg. 16