RE: RE: RE: Severstal Gold productionSome interesting stuff I pulled from Severstal's financial reports. It would appear that they do account for gold production at HRG (and financials) in their statements, but examine the area in YELLOW below, possibly Q1 only. In addition they follow the purchase method of accounting, so they are taking a direct hit because of HRG's poor performance in FY2008 to the toon of $78 million in write down of goodwill, and 6 million in earnings. Sorry it looks "hacked" because I had to convert it twice to get it off their report.
https://www.severstal.com/eng/investor_relations/reports/financial/
This is interesting Severstal does not control OJSC or Taparko, as HRG owned less than 100%. Makes for some interesting twists. Ccharlwoods lawyers should really look into Severstal's policies as there are additional rules (hahaha) and conduct guidelines of Severstal, officers and employees. From the report I can see a slew or other gold companies Severstal has their fingers in, so reconciliation would not be possible, but HRG looks like it would be their single largest gold producer.
Happy reading CJ
High River Gold Mines Ltd 53.8% Canada Holding company
OJSC Buryatzoloto 45.7% Russia Gold mining
Berezitovy Rudnik LLC 53.3% Russia Gold mining
Societe Des Mines de Taparko 48.4% Burkina Faso Gold mining
In November 2008, the Group acquired a 53.8% stake in High River GoldMines Ltd. for a total cash consideration ofUS$62.5million.High River isa gold company with interests in producing mines, minesunderdevelopmentandadvancedexplorationprojectsinBurkinaFasoandRussia.Two producingmines, Zun-Holba andIrokinda("OJSC"Buryatzoloto") ,aresituatedintheLakeBaikal region of Russia. Two new open pit gold mines, Taparko-Bouroum(Societe Des Mines de Taparko) in Burkina Faso, and Berezitovy(Berezitovy Rudnik LLC)in Russia, havebeen constructed and are currentlybeingputintofullproduction.Managementhasnotyetcompletedtheestimationoffair values of the acquired assets and liabilities and, accordingly, doesnot currently possess all necessary informationtodisclosetheeffectofthisacquisitionontheGroup’sfinancialpositionorresultsof operations.Final purchaseprice allocationis expectedtobe completedwithin one yearstarting from the date of acquisition. Theacquiree’slossfromthebeginningoftheperiodtothedateofacquisitioncomprised US$38.9million.LosssincetheacquisitiondateincludedintheGroup'sprofitfortheperiod amounted to US$6.6million. Theacquiree’s revenue fromthe beginning of the period to thedate of acquisition comprised US$ 177.0 million.
OAO Severstal and subsidiaries
Notes to the consolidated financial statements
for the years ended December 31, 2008, 2007 and 2006
(Amounts expressed in thousands of US dollars, except as otherwise stated)
Alsoincludedin negativegoodwill isUS$78million whichis thedifference betweenthepurchasepriceand provisionally definedfair value of theacquired consolidated netassetsof HighRiver Gold MinesLtd. Thisdifferencearoseprimarily duetoalackof High River`s anditspriorshareholders’ ability to service its debt.
Basis of consolidation
Subsidiaries
Subsidiariesarethoseenterprisescontrolled,directlyorindirectly,bytheParentCompany.The financialstatementsofsubsidiariesareincludedintheseconsolidatedfinancialstatements fromthe datethatcontroleffectivelycommencesuntilthedatethatcontroleffectivelyceases.Theminority interestrepresentstheminorities’proportionofthenetidentifiableassetsofthesubsidiaries, includingtheminorities’shareoffairvalueadjustmentsonacquisitions.Minorityinterestsare
presented in the consolidated balancesheetwithin equity, separately from the parent’s shareholders’ equity. Intra-group balancesand transactions, and any unrealized gains arising from intra-group transactions, areeliminatedinpreparingtheseconsolidatedfinancialstatements;unrealizedlossesarealso eliminated unless the transaction provides an evidence of impairment of the asset transferred.
Acquisition of Subsidiaries
Thepurchasemethodofaccountingwasusedtoaccountfortheacquisitionofsubsidiariesbythe Group. The initial accounting for a business combination involves identifying and determining the fair values to be assigned tothe acquiree’s identifiable assets, liabilities and contingent liabilitiesandthe cost of acquisition. If the initial accounting for a business combination is incomplete by the end of the period inwhichthecombination iseffected,theGroupaccountsforthecombinationusingtheprovisional values for the items for which the accounting is incomplete. The Group recognizes any adjustments to thoseprovisionalvaluesasaresultofcompletingtheinitialaccountingwithintwelvemonthsfrom the acquisition date. As a result goodwill or negative goodwill is adjusted accordingly. Comparative information presented for the periods before the completing the initial accounting for the acquisition is presented as if the initial accounting had been completed at the acquisition date.
Accounting for business combinations of entities under common control
IFRSprovidesnoguidanceonaccountingforbusinesscombinationsofentitiesundercommon control.Managementadoptedtheaccountingpolicyforsuchtransactionsbasedontherelevant guidance of accounting principles generally accepted in the United States (‘US GAAP’). Management believes that this approach and the accounting policy disclosed below are in compliance with IFRS. Acquisitionsofcontrollinginterestsincompaniesthatwerepreviouslyunderthecontrolofthe
MajorityShareholderareaccountedforasiftheacquisitionhadoccurredatthebeginningofthe earliestcomparativeperiodpresentedor,iflater,atthedateonwhichcontrolwasobtainedbythe MajorityShareholder.Theassetsandliabilitiesacquiredarerecognizedattheirbookvalues.The componentsofequityoftheacquiredcompaniesareaddedtothesamecomponentswithinGroup equityexceptthatanysharecapitaloftheacquiredcompaniesisrecordedasapartofadditional capital.Cashconsiderationforsuchacquisitionsisrecognizedasaliabilitytoorareductionof receivables from related parties, with a corresponding reductionin equity, from the datethe acquired companyisincludedintheseconsolidatedfinancialstatementsuntilthecashconsiderationispaid.