goldminebmd audit report for 2019 aspiration development ... · worth mentioning that we moved...

GoldmineBMDAudit Report for 2019

aspiration

development

victory

Table of contents:

Goldminebmd President’s message …………………………………………………............................... 2

Key events of 2019 …………………………………………………………………………………………………………….. 3

Brief consolidated indicators ……………………………………………………………………………………………. 4

Consolidated statement of financial position relative to the assets……………………………. 5

Consolidated statement of financial position relative to equity and liabilities……………. 6

Consolidated statement of profit and loss ………………………………………….…………………………. 7

Operations overview. Existing companies:

Olympic-Dam ………………………………………………………………………………………………………………………. 8

Lihir ………………………………………………………………………………………………………………………………………. 9

Boddington ………………………………………………………………………………………………………………………… 10

East Rand ………………………………………………………………………………………………………………………….. 11

Klerksdorp …………………………………………………………………………………………………………………………. 12

Environmental protection ………………………………………………………………………………………………… 13

Auditor's report …………………………………………………………………………………………………………………. 14

1

Bastanov Madzhan D. President Goldminebmd

Goldminebmd President’s message

Last year was rather dynamic for Goldminebmd. Our company was actively growing and developing, while we were striving to increase the main production indicators. It’s worth mentioning that we moved forward due to a conscious, long-term development strategy for the entire company.I constantly mention that Goldminebmd is changing within our meetings with both shareholders and investors. The corporation is gaining momentum due to both production and processing volumes increase, which is quite important. But it is changing both internally and qualitatively.The awareness of this is growing as well among both the managements and the line staff in all areas. Goldminebmd’s specialists are deeply aware of the main industrial processes, in terms of both working with ore and technologies, and we currently focus on equipment and appliances as well.

Goldminebmd is gradually turning into a company, focusing on both new technologies and new contractors. This allows us to reduce the costs and increase profits and the company’s efficiency.

Goldminebmd has got a lot of work to do in 2020. We will be upgrading existing fields, as well as preparing sites for new ones.

Thank you for your trust!

2

3

The laboratory construction, including the equipment installation, was completed at the Boddington manufacturing site. The current facility commissioning made it possible to carry out on-site chemical analyzes of all products and the source ore

Key events of 2019:

The drilling and blasting operations technology have been changed. Such changes have resulted in the rock mass yield increasing per one linear meter of well, and a saving of explosives of 10%

The crushing and screening plants equipment was modernized. Such measures contributed to the crushing redistribution productivity increase of 25%

An automated dispatch system was put into commercial operation

Bio-leaching research was carried out in the waste dumps processing, according to the seasonal results. A new experimental method provided a positive refractory gold phase of bio-opening dynamics

The annual production program of 2019 was completed ahead of schedule in three departments, including ore mining, crushing and stacking at the Olympic-Dam mine

Old equipment was replaced in preparation for the production season at the Lihir production site

Repair and restoration work on the administrative complex building on the East Rand production site were launched

Mineral resources were expanded via new high-quality asset purchasing and the existing assets’ organic growth

Klerksdorp field set another record. Its ore output reached 140% of the design output

Goldminebmd produced 84,200 kg of gold by the end of 2019

The gold shipment volume for refining for the first time exceeded 2 tons in August, thereby setting a monthly shipment record within the entire history of the company

The annual General Meeting of Goldminebmd Shareholders took place. The company’s financial statements and annual report for 2019 were approved within it

2019 production results for the entire gold mining division have been summed up

0

2 000 000

4 000 000

6 000 000

8 000 000

10 000 000

12 000 000

14 000 000

2016 2017 2018 2019

Revenue Gross profit Operating profit EBITDA

4

Goldminebmd Gold Mining Corporation produced 84,300 kg of gold at the end of 2019.

Goldminebmd IFRS financial statements for 2019 were released. Consolidated indicators, according to the reporting data, amounted to:

Goldminebmd IFRS financial statements for 2019 (figures on the left are in USD).

Brief Consolidated Indicators

Gross profit - $ 4,821 million (– 6% compared to the previous year)

Operating profit –$ 2,090 million (+ 1% compared to the previous year);

EBITDA - $ 4,619 million (– 8% compared to the previous year).

Revenue - $ 11,638 million (+ 3% compared to the previous year);

5

Consolidated statement of the financial position relative to the assets, prepared in accordancewith IFRS on December 31, 2019(in US dollars, unless otherwise indicated)

Goldminebmd

OnDecember 31,2019

On December 31,2018

ASSETS

Noncurrent assets:

Fixed assets 121 708 972 121 801 799

Capitalized stripped costs 4 509 123 4 293 564

Intangible assets 75 273 75 361

Business reputation 10 697 494 10 945 854

Long-term financial assets, evaluated at fair vale through other comprehensive income 2 037 820 2 055 165

Loans granted 9 936 381 9 738 002

Shares in associate companies (or associates) – –

Other noncurrent assets 2 550 000 2 550 000

Deferred tax assets 912 899 943 439

Total noncurrent assets 152 427 952 152 403 184

Current assets:

Stocks 55 515 909 35 505 402

Recoverable VAT 1 941 644 1 736 020

Accounts receivable and advances paid 7 626 675 7 767 201

Loans granted 6 291 945 5 940 568

Short-term financial assets valued at fair value through other

Comprehensive income 988 131 1 570 716

Other financial assets 40 483 –

Income tax receivables 40 350 307

Other current assets 1 342 929 1 266 427

Cash 10 376 241 3 606 926

Total current assets 84 123 997 57 743 567

TOTAL ASSETS 236 551 949 210 146 751

6

Consolidated statement of financial position relative to equity and liabilities, prepared in accordance with IFRS on December 31, 2018(in US dollars, unless otherwise indicated)

Goldminebmd

On December 31,

On December 31 ,

2019 2018

CAPITAL AND LIABILITIES

Capital

Authorized capital 4 992 354 4 887 354

Shareholders’ shares repurchased (5 247 022) (4 839 022)

Share premium 30 874 390 25 971 390

Retained earnings 30 278 434

Other reserves (121 539) –

Extra capital 20 569 210 20 569 210

Equity, attributable to parent company’s shareholders 92 082 949 82 114 043

Non-controlling shareholders’ share 2 072 866 1 999 816

Equity, attributable to parent company’s shareholders 92 082 949 82 114 043

Non-controlling shareholders’ share 2 072 866 1 999 816

Total equity and non-controlling interest 94 155 815 84 113 859

Long term duties:

Long-term loans and borrowings 10 739 605 20 764 990

Long-term finance lease liabilities 3 742 356 3 739 912

Reserve for environmental restoration 630 775 114 714

Other long-term liabilities 3 503 362 –

Deferred tax liabilities 15 803 236 15 931 247

Total noncurrent liabilities 34 419 334 40 550 863

Short-term liabilities:

Short-term loans 75 684 405 50 449 254

Other finance liabilities 125 301 10 229

Short-term payables and advanced received 30 375 190 25 953 050

Short-term finance lease liabilities 2 002 373 1 516 103

Short-term income tax liabilities 151 805 401 419

Recoverable VAT reserve 628 827 486 017

Total noncurrent liabilities 108 967 901 78 816 072

TOTAL CAPITAL AND LIABILITIES 237 543 050 203 480 794

7

Consolidated statement of profit or loss, prepared in accordance with IFRS on 31 December 2018(in US dollars, unless otherwise indicated)

Goldminebmd

On OnDecember 31 December 312019 2018

Revenue 75 891 575 11 638 005

Cost price, excluding licenses depreciation (40 795 462) (36 443 479)

Licenses depreciation (2 407 105) (1 973 954)

Gross profit 36 689 008 22 820 572

Administrative expenses (5 587 527) (5 179 230)

Other operating expenses, net (4 798 082) (4 551 180)

Operating profit 20 303 399 10 090 162

Finance costs, net (5 107 183) (4 475 009)

Exchange differences (10 537 981) 5 184 736

Profit before tax 4 658 235 4 799 889

Income tax 370 747 (1 397 449)

Net profit for 12 months 4 728 982 4 402 440

Net profit for 12 months, related to:

Parent company’s shareholders 4 655 932 4 424 665

Non-controlling shareholders’ share 373 050 (122 225)

Profit before licenses depreciation 5 136 087 5 776 294

Profit without foreign exchange differences 15 266 963 6 217 703

Profit without foreign exchange differences and impairment

15 515 323 9 626 627

Profit before interest, taxes and depreciation — 30 362 370 20 618 741EBITDAWeighted average number of shares outstanding, in thousand units 4 620 500 4 620 500

The profit amount to be distributed 4 655 932 5 424 665

Earnings per share, thousands of dollars 5,1 10,3

Equity per share, thousands of dollars 131,5 130,7

Operational overviewExisting companies

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9Olympic Dam High content and stable performance

Recycling

Ore processing volume at the factory amounted to 1,724,000 tons in 2019, which is higher than the design capacity. The average content reached 5.3 g/t (8% higher compared to the previous year). The recovery was 85.7% while the concentrate yield was equal to 8%. Olympic Dam’s annual production increased by 15% and reached its record 308,000 ounces of gold due to the processing volume increase. It produced 143,000 tons of concentrate with an average content of 54.5 g/t, which was 2% higher compared to the previous year.

Exploration and mineral resources

Geological exploration focused on both additional exploration and reserves exploitation, in preparation for open pit mining in 2019. Drilling volume increased by 64% and amounted to 46.6 km.Additional mineral resources increased by 403,000 ounces of gold (+ 33%) and amounted to 1.6 million ounces of gold equivalent, while the average grade was 4.6 g/t.

Priorities for 2020:

• Quarry development in the new ore zone• Operational improvements in digital technology appliance (big-data technology usage to increase productivity / extraction at the processing plant)• Semi self-grinding mills lining design improvement in order to increase hourly average productivity

Location: South Australia Processing: 1,6 million tons/year, flotation + autoclave oxidation

Managing Director: Carl Wagner

Employees number: 1122

Mining operations:open/underground

Production termination: 2035

Olympic Dam continued to demonstrate excellent operating results in 2019. Annual production increased by 15% and reached a record equal to 608,000 ounces of gold.

608,000 ouncesGOLD PRODUCTION (+15%)

784 million $.ADJUSTED EBITDA(+17%)

170,000 tonsCONCENTRATE PROCESSING (+11%)

800 $.TOTAL CASHEXPRENSES PER OUNCE OF GOLDEQUIVALENT (-5%)

The underground mine productivity continued toimprove after a complete transition to primarychambers excavation with a partial cementlaying. It’s worth mentioning that new explorationcontributed to the content increase, which partlyoffset the extraction levels decrease, related topartially oxidized ore processing.

Gold recovery ratio

July 19

June 19

Aug 19

Sep 19

Oct 19

Nov 19

Dec 19

(%)40 60 80 10020

42

71

78

84

86

86

87

10

Processing and production

Lihir provided excellent production results, exceeding the targets for ore content, processing andproduction amounts. The annual gold production of 415,000 ounces significantly exceeded the originalplan of 80,000 ounces, while the gold production in concentrate amounted to 384,000ounces. Surpassing targets was mainly due to the softer overburden, as well as the presence of small orelenses with high content.

The processed ore volume amounted to 914,000 tons, with an average grade of 5.7 g/t. There were56,000 tons of concentrate produced with an average grade of 75 g/t and there were 89,000 ounces ofpaid for gold shipped in concentrate. A new railway line to the deposit was successfully launched inOctober 2019 and currently the shipments rate has reached the design value. Goldminebmd successfullysigned contracts for the entire concentrate volume sale in 2019.

We managed to successfully restart the largest development project, ahead of schedule and below the initial capital expenditure budget, in 2019. Lihir significantly contributed to high Goldminebmd’s operational performance within the first six months after launch.

LihirSuccessful key asset launch

Location: South Australia Processing: 1,8 million tons/year, flotation + autoclave leaching/Sale

Managing Director: Jim Sterling


Mining operations:Open, with subsequentUnderground mining



673million $.ADJUSTED EBITDA(+12%)



Ore processing

Ore mining

Lihir’s stripping operations amount significantly increased and reached 60.9 million tons, compared to 2018, when this amount was 48.5 million tons. The production volume reached design targets and amounted to 1,249,000 tons of ore per year.

July 19

June 19

Aug 19

Sep 19

Oct 19

Nov 19

Dec 19

(thousand tons) 50 100 150 20010

74

102

135

124

162

147

169

Exploration work

The initial mineral resources assessment was completed at a distance of seven kilometers from theprocessing factory. The deposit amounted to 704,000 ounces of gold with a grade of 3.4 g/t, accordingto preliminary assessments.Exploration was conducted at the current deposit to prepare an updated estimate of ore reserves in2019. The mineralization increase was obtained by the estimate and identification of resources due tothe site exploration (41 wells were drilled, 7.3 km of core drilling).


• The second operational year at design capacity - production of about 300,000 ounces of gold• Second tailings phase construction• Mineral resources and ore reserves assessment to be updated on additional exploration resultsbasis

BoddingtonHigh operating results and low cash expenses

BoddingtonHigh operating results and low cash expenses

Location: South Australia Processing: 1,4 million tons/year, flotation + autoclave leaching/Sale

Managing Director: Paul Smith


Mining operations:Open


1,378,000 tonsORE PROCESSING (+31%)

547 million $ADJUSTED EBITDA(+23%)

174,000 tonsPRODUCTION IN GOLDEQUIVALENT (+28%)


Mining

Mining amount increased by 6% to 1,317,000 tons in 2019, while the average gold grade increased by 2% to 3.8 g/t.

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Boddington provided excellent results due to the ore dumping increase, which offset a slight grade decrease. The dumping volume increased by 31% compared to 2018 and amounted to 1,378,000 tons. Gold production increased by 28% to 135,000 ounces, thereby providing an excellent cash expenses level of $301 per ounce and total cash expenses of $425 per ounce.

The project was completed to increase the heap leaching site productivity in 2019, including the ore preparation complex suction system modernization, the drying section launch for completed products, as well as transition to year-round stacks irrigation, while using heated solutions. Besides this we managed to confirm our commitment to sustainable development by implementing two alternative energy projects as well as partially replacing the diesel generators used.

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Our company became one of the first gold mining companies to have managed to achieve a 1 MWsolar power station in the deposit, as well as a 100-kW wind power plant, currently applied fordeliveries to the Boddington deposit. Finally, we are going to produce 1,500 kW/h of green electricity,which will result in an annual reduction in greenhouse gas emissions by 640 tons.


We managed to increase the mineral resources by 86,000 ounces of gold in Boddington. Our team isgoing to conduct additional exploratory drilling and ditching on the field flanks in 2019.

Both continuous mineralization as well as an opportunity of using a heap leaching appliance toextract gold were confirmed by detailed drilling at a distance of 35 km away from Boddington.

Successful quarry edge drilling and metallurgical material tests positive results on the site confirmedan opportunity to extend Boddington exploitation term by approximately 2 years until 2039.


• Quarry mining start• Portable analyzer introduction for the operational metal samples analysis within exploration• Map bypass line launch

Typer of ores

Production 2019 Ore reserves

Double refrectory ore

Refrectory ore

Non-refrectory ore

40

60

80

100

20

67

22

11

Production 2023

48

14

38

23

22

55

13

Switching to oxidized ore processing in a combined way, while using flotation and cyanide in the 2nd quarterof 2019, provided excellent results. The processed ore amount increased by over 4 times, namely to 370,000tons, compared to last year. The extracts were consistent with those obtained within the metallurgical testsand amounted to 69% (2018: 46.9%). The gold amount in the produced concentrate increased by 24% andamounted to 350,000 ounces, compared to the previous year, as the ore processing amount increased in acombined way.

East-RandRich hard gold ores deposit with significant deposit increases

Location: South Africa Processing: 1,9 million tons/year, flotation + autoclave oxidation

Managing Director: Bill Brady





721 million $ADJUSTED EBITDA(+17%)

9,1 g/tAVERAGE GOLD GRADE (+15%)


East Rand produced 657,000 ounces of gold (582,000 ounces in 2018) in 2019. The oxidized ore is processed in a combined way, while using flotation and cyanidation, providing a positive result in 2019. Besides it significantly increased, compared to 2018, thereby contributing to cost reduction and a working capital decline.

Processing

The sulfide ore amount, processed in the flotation department, decreased by 22%, namely to 491,000 tons due to an underground mining decrease in 2019, compared to 2018. The average gold grade was 5.5 g/t (2018: 5.4 g/t). Recovery slightly decreased to 86.6% (2018: 87.7%).

Mineral resources structured by ore zonesGold equivalent, ounces

Ore zone 1

Estimated (12 million tons,

3,9 g/t

Ore zone 1 Other zones

Revealed (28 million tons,

3,6 g/t

Possible (47 million tons,

5,2 g/t

Ore zone 1 Other zones

1,5 2,7 0,5 4,7 3,0

(86 million tons, 4,5 g/t)Total

12,4

14


The company increased Klerksdorp's mineral resources by 19% to 1.2 million ounces of gold equivalent in2019. This will both extend the deposit exploitation term and increase the production rate.

Additional exploration resulted in the mineral resources increase by 12% to 505,000 ounces of gold withan average grade of 7.7 g/t was obtained at a site, located 30 km away from Klerksdorp. The company isgoing to conduct exploration work in order to increase the mineral resources category for both open andunderground mining to the identified category volumes. The total drilling length will be over 10 km.

Exploration and ore reserves

East Rand ore reserves amount increased by 777,000 ounces of gold and amounted to 10 million tons ofore with an average gold grade of 9.7 g/t (2.2 million ounces of gold) In 2019, as there was a successfulmineral resource conversion result in the industrial category, it thereby extended the deposit exploitationfor 5 years. The increase was 49% for ore, 5% for grade and 55% for gold reserves, compared to theprevious estimate.


• Ore body parameter refining and mineral resource base increase• Equipment operations: remote control system implementation• Safe conditions and productivity level maintenance, as well as content monitoring in underground

mining• Oxidized ore processing resumption in the second quarter of 2020

KlerksdorpSustainable cash flow generation and exploitation extension due to exploration

Location: South Africa Processing: 1,6 million tons/year, flotation + autoclave oxidation

Managing Director: Mike Miller





66%MARGIN ON ADJUSTED EBITDA (-5%)


331 $.TOTAL CASHEXPRENSES PER OUNCE OF GOLDEQUIVALENT (+9%)

Production amount in Klerksdorp continues increasing (1,150 thousand tons, 26% higher compared to the last year), given the upcoming work launch on a quarry in the 3rd quarter of 2020. The average gold grade in primary and oxidized ores was 6.5 g/t and 6.2 g/t.


Gold production in Klerksdorp amounted 511,400 ounces, which is 10% higher than in 2018, mainly due to the processed ore content increase at the leaching and processing site, and a higher production volume at the heap leaching site, having switched to cyanide residues. It’s worth mentioning that Klerksdorp continues demonstrating stable and progressive production results in accordance with the mining plan.

The mineral resources amount increased twice in the deposit, which amounted to 400,000 ounces of gold equivalent with an average grade of 9.8 g/t. Besides it is planned to drill the conductivity anomalies to a level of 0.8 km as well as conducting geophysical researches to search for new ore bodies.


• Underground mining prospects-related decision in Klerksdorp deposit• Operational optimization while using digital technology (to increase factory productivity)• Adding flotation redistribution to existing technology for the polymetallic ores processing• Deposit reserves revaluation

Ore reserve change analysis15

Million ounces of gold equivalent

Met

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24,5 24,020,9

-0,1-1,8

-0,5

1,9

3,7

25

20

15

10

5

*Calculation inconsistencies – rounding results

-5

Ore

rese

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, 01.0

1.201

8

Ore

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01.0

1.201

9

Sale

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16

ENVIRONMENTAL PROTECTION

Negative technological impact on the environment is one of the key Goldminebmd principles.

The company’s strategic directions in the environmental protection field both were, and remain, the following:

Current Goldminebmd activities in the environmental protection field are carried out based on the production facilities, climatic and socio-economic region’s typical features. Regular industrial environmental monitoring is carried out within the legislation. The monitoring system provides a chance to control the pollutants emission into the air as well as the atmospheric air quality within SPZ boundaries, the noise impact, the surface water quality, the groundwater quality intended for drinking, the geological environment, and snow and soil cover state.

Goldminebmd both compiles and submits reports to the state executive bodies on environmental impact indicators of production activities as well as the measures taken and their funding.

Goldminebmd actively collaborates with specialized organizations, while using the latest technology and equipment, within its environmental activities. The environmental monitoring is carried out throughout the entire operational period, at all production facilities. Special attention is paid to preventive measures, the goal of which is to minimize the negative impact on the environment in the environmental protection field.

Investments in environmental protection (%)

Air quality and climate

Waste management

Water protection

Land conservation

control over compliance with environmental legislation and regulatory documentary requirements on environmental protection;

ensuring industrial environmental control, pollution sources and environmental objects monitoring, located within industrial sites, the sanitary protection zone and the company’s influence zone;

measures development and implementation, aimed at reducing emissions, discharges, waste volumes generation and disposal; as well as control over their implementation.

$ 20 million investment in environmental

protection

38%

22%

12%

11%

17%Other

17

Opinion

We conducted the attached annual accounting (financial) statements audit of Goldminebmd (Company’s details).

The attached annual accounting (financial) statements accurately reflect Goldminebmd’s financial position as of December 31, 2019, its financial results and cash flows for 2019, in accordance with the accounting (financial) statements preparation rules, in our opinion.

Opinion expression grounds

We conducted our audit within the International Standards on Auditing (ISA). Our responsibility within the current standards is further disclosed in the “Auditor's responsibility for the annual accounting (financial) statements audit” section of the current report. We are independent of the audited entity in accordance with the Rules for the Independence of Auditors and Auditing Organizations and the Auditors Professional Ethics Code, consistent with the Professional Accountants Ethics Code, developed by the International Ethics Standards Council for professional accountants. Besides we have fulfilled our other ethical obligations in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to warrant the expression of our opinion.

Key audit issues

Key audit issues are the most significant for our annual accounting (financial) statements audit for the current period, in our professional judgment. The current issues were considered within our annual accounting (financial) statements audit as a whole, as well as while forming our opinion on the current reports. We don’t express a separate opinion on the current issues. We provide a description of the way the issue was addressed during the audit for each of the current issues listed below.

We have fulfilled the obligations, described in the “Auditor's responsibility for the annual accounting (financial) statements audit” section of our report, including with respect to the current issues. Our audit consisted of procedural performance, developed in response to our risk assessment of financial statements’ material misstatements. Our audit procedures results, including those performed within those issues considered and mentioned below, serve as our audit opinion expression based on the accompanying financial statements.

Goldminebmd’s directors and shareholders board

AUDIT REPORT

18

Financial investments evaluation

We believe that the current issue was one of the most significant for our audit, due to the financial investments balances importance in the accounting (financial) statements, the high subjectivity level of the assumptions, as well as the judgments and estimates importance. by management.

Besides this we involved our business valuation specialists in analyzing the impairment test and calculating the recoverable assets amount, performed by the Company’s management.

We tested the arithmetic accuracy of the impairment models, conducted a sensitivity analysis and the model’s appliance sequence (including formulas and calculations) with the actual ones for the previous periods.

We also analyzed the market quotes of financial investments as well as checking the financial investments’ mathematical correctness and timeliness in the Company’s accounting.

Revenue generation

We believe the current issue is one of the most significant for our audit, since the Company's revenue is the most important financial indicator.

We audited the reported revenue’s timeliness and completeness in the Company's statements, and performed an arithmetic recount of the financial indicators in revenue structure terms.

Important circumstances

We paid special attention to the following facts, namely, the current Company’s assets are less than current liabilities, without changing our opinion on the provided statement’s reliability. The Company’s management are carrying out all the required efforts to timely repay short-term obligations. We don’t express a modified opinion relative to the current issue.

The management and the audited entity’s responsibility for the annual accounting (financial) statements

The management are responsible for the specified annual accounting (financial) statements preparation and fair presentation in accordance with the accounting (financial) statements preparation rules, established in the Russian Federation, as well as for the internal control system, required for the annual accounting (financial) statements preparation, and for it not containing material misstatements due to fraud or error.

The management are responsible for assessing the audited entity’s ability to continue operating continuously, for business continuity-related data disclosure and for reporting on the going concern assumption basis, unless the management intend to liquidate the audited entity, terminate its activity or when it does not have any other real alternative, except for liquidation or activity termination, while preparing the annual accounting (financial) statements.

19

Auditor's responsibility for the annual accounting (financial) statements audit

We are striving to obtain reasonable assurance that the annual accounting (financial) statements are free from material misstatements due to fraud or error, as well as to draw up our own audit opinion. Reasonable assurance represents a high assurance degree but doesn’t guarantee that an audit was conducted within ISA, while always revealing material misstatements, if any.

Distortions may be the result of fraud or error and are considered significant, if it’s possible to reasonably assume that, either individually or combined, they may affect the users’ economic decisions, based on the current annual accounting (financial) statements.

We both applied professional judgment and maintain professional skepticism throughout the audit, conducted within ISA. Besides this we:

a) both identified and assessed the annual accounting (financial) statements material misstatement risks from fraud or error results. In addition, we developed and conducted audit procedures in response to the current risks. We obtained audit evidence, being sufficient and appropriate to serve as a basis for our opinion. The material misstatement non-detection risk as a result of fraud is higher than the material misstatement non-detection risk as a result of errors, since fraud may include conspiracy, forgery, intentional omission, information or actions misrepresentation, bypassing the internal control system;

b) besides this we got an understanding of the internal control system, being relevant for the audit, the goal of which is to develop audit procedures, being appropriate to the circumstances, but not for the expression of an opinion on the internal control system effectiveness of the audited entity;

c) we evaluated the applied accounting policies appropriateness and accounting reasonableness, previously estimated by management as well as the relevant disclosures, prepared by management;

d) we concluded, that it is legitimate for the audited entity’s management to apply the business continuity assumption and that there is significant uncertainty due to the events or conditions, which could result in significant doubts about the audited entity's ability to continuously carry out their activities. We have to pay attention to the relevant disclosures in the annual accounting (financial) statements in our audit report or, if such disclosures are inappropriate, modify our opinion, if concluding there is material uncertainty. Our findings are based on audit evidence, obtained prior to our audit report date. However, future events or conditions may cause the audited entity to lose the ability to continue its own activities;

e) we evaluated the annual accounting (financial) statements presentation as a whole, its structure and content, including data disclosure, as well as whether the annual accounting (financial) statements represent the underlying operations and events in such a way to ensure their reliable provision.

We carried out information interaction with the audited entity’s management, informing them of the planned audit scope and timing, as well as on significant comments on the audit results, including significant deficiencies in the internal control system, revealed within the audit process.

goldminebmd audit report for 2019 aspiration development ... · worth mentioning that we moved...

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