Annual Report

Consolidated Financial Statements

For the years ended December 31, 2013 and 2012

and Auditors’ Report to the Shareholders

Management Discussion and Analysis

For the year ended December 31, 2013

(In United States dollars, unless otherwise noted)

Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

Date
The following discussion is management’s assessment and analysis of the results of operations and
financial conditions (“MD&A”) of Kalimantan Gold Corporation Limited (the “Company” or “Kalimantan
Gold”) and should be read in conjunction with the accompanying consolidated financial statements and
related notes thereto for the year ended December 31, 2013, (the “Financial Report”) which are available on
the SEDAR website at www.sedar.com.
All financial information in this MD&A related to 2013 and 2012 has been prepared in accordance with
International Financial Reporting Standards (“IFRS”) and all dollar amounts are expressed in US dollars
unless otherwise indicated.
Additional information relating to the Company is available on SEDAR at www.sedar.com.
The effective date of this MD&A is April 24, 2014.

Overview
Description of the Business
Kalimantan Gold Corporation Limited is incorporated in Bermuda and is an exploration stage company
engaged in the business of acquiring and exploring mineral properties in Kalimantan, Indonesia. The
Company is a reporting issuer in British Columbia, Alberta and Ontario and trades in Canadian dollars on
the TSX Venture Exchange in Canada and in British Pounds Sterling on the AIM Market in London under
the symbol KLG.
The Company has two principal areas of interest: the KSK Contract of Work (the “KSK CoW”) in Central
Kalimantan with multiple porphyry copper and gold prospects and the Jelai Izin Usaha Pertambangan (the
“Jelai IUP”) epithermal gold prospect in North Eastern Kalimantan.

The holder of the KSK CoW is PT Kalimantan Surya Kencana (“KSK”). Kalimantan Gold holds 100% of the
shares of Indokal Limited (“Indokal”). KSK is owned 75% by Indokal and 25% by PT Pancaran Cahaya
Kahayan (“PCK”). Indokal owns 100% of PCK.

The KSK CoW was granted April 28, 1997 between the Republic of Indonesia and KSK as a 6th generation
CoW. The terms of the KSK CoW defines several periods under which work done on the KSK CoW will fall.
th
The KSK CoW is now confirmed as being in the 5 year of the Exploration Period until April 28, 2014. The
th
Company has applied under Article 23 of the KSK CoW for a 6 year extension of the exploration period.
This request has been accepted by the Ministry of Mines and the formal extension letter is in process. The
period following Exploration is the Feasibility Study Period which runs for not less than two years, is
extendable, and provides time to complete studies and identify the mining area.

A portion of the KSK CoW is within a Hutan Lindung (protected / reserved forest) area. The KSK CoW was
granted prior to the enactment of the 1999 Government of Indonesia Law No. 41 on Forestry which
prohibits open pit mining in Hutan Lindung areas. A subsequent Presidential Decree has confirmed that
when the Company’s property meets the necessary criteria it may apply for a permit to exploit that portion of
the properties within the KSK CoW that fall within the Hutan Lindung, either by underground mining or by
applying to change the forestry permit. On March 12, 2012 (as amended April 8, 2013), KSK received a 2-
year forestry permit granting permission to explore certain areas of the KSK COW. On December 2, 2013,
the Company applied for a 2-year renewal of the forestry permit for a total area of 7,688ha of which
170.25ha falls within the Hutan Lindung. This 7,688ha area covers all of the main prospect areas within the
KSK CoW. This renewal has been processed and is expected to be issued shortly.

On April 18, 2011, as amended on May 31, 2012, the Company entered into a joint venture agreement (the
“KSK Agreement”) with Surya Kencana LLC (“SK LLC”), a wholly-owned subsidiary of Freeport-McMoRan
Exploration Corporation (“Freeport”) in relation to the KSK CoW. Notice was received from SK LLC on
December 30, 2013, of their withdrawal from the KSK Agreement effective January 31, 2014. SK LLC has
therefore forfeited its right to the shares of Indokal. However, SK LLC will retain the right to a royalty of 1%

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Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

over the property, capped to a maximum of the total expenditures of approximately US$35 million made by
SK LLC on the project.

The holder of the Jelai IUP is PT Jelai Cahaya Minerals (“JCM”). A wholly-owned subsidiary of the
Company, KLG Singapore Private Limited, holds 99.3% of the shares of JCM. The remaining 0.7%
continues to be held for the benefit of Kalimantan Gold by the same two nominee shareholders who
previously held 100% of JCM.

The overview and highlights for the year ended December 31, 2013 and up to the date of this report
include:

Beruang Kanan (“BK”) Copper Project

The BK Copper Project contains VHMS - style mineralization. Geochmical sampling and drill data has
defined a mineralized zone of approximately 1.1 km long, up to 450m wide, 50m thick and open in all
directions.

High grade mineralization is hosted in three discrete sulphide-rich breccia and replacement zones,
characterized by cavity fill and replacement chalcopyrite (and covellite after chalcopyrite) hosted in re-
opened, anastomosing quartz veins. Covellite and chalcocite predominate in the near-surface environment
while chalcopyrite predominates in deeper mineralization.

Figure 1: BK Drill Core - BK058

Figure 1 shows drill core from BK058 with high grade bornite, covelite and chalcopyrite mineralization.

An extensive exploration program has been undertaken on the Project including:

a) existing drilling (approximately 26.1km);
b) rock chip and soil sampling;
c) geophysics; and
d) geochemistry.

During the last 12 months, an extensive soil sampling program has been completed on the BK deposit, as
shown in Figure 2. This shows anomalous copper in soils similar to the levels observed over the BK Main
Zone. In addition, some of the copper in soil anomalies correlate with IP chargeability highs, a
characteristic also present over the BK Main Zone.

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Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

Figure 2: BK Deposit - Soil Sampling

Figure 3 shows the relationship between rock chip samples and IP Chargeability (100m below surface).
The black dots are proposed drill holes. The BK West area shows several chargeability highs that are
partially correlated with copper in surface rock chip samples, similar to the pattern observed in the BK Main
Zone. Rock chip samples from BK West returned values of up to 0.8% copper.

Figure 3: BK Deposit - Rock Chip Samples and IP Chargeability (100m below surface)

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Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

Figure 4: BK Main Zone - Drill Program

Figure 4 shows the previous and proposed drill hole locations, along with the completed delineation holes in
the BK Main Zone.

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Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

Other Projects

Kalimantan holds a suite of other highly prospective projects within the KSK CoW (outside the BK Copper
Project), including:

(a) Mansur & North Mansur Prospects;

(b) Tumbang Huoi and Tisoi Prospects; and
(c) Baroi Prospect.

Figure 5: KSK CoW Portfolio of Prospects

Mansur & North Mansur Prospects

The North Mansur Prospect is located within a large circular feature which has an associated strong
magnetic anomaly approximately 800m in diameter and over 1,000m in vertical extent. This is coincident
with a greater than 1,000m diameter ‘doughnut shaped’ copper and gold geochemical anomaly (50-100ppm
copper). The majority of previous shallow drill holes (< 100m) are located directly above the magnetic
anomaly. Chalcopyrite-bearing quartz stock-work zones were intersected in each of the shallow holes, with
intercepts up to 40m @ 0.24% Cu and 0.24g/t Au at the margins of the copper anomaly.

The Air Mansur Prospect is located within the central part of the Mansur region. The Prospect contains
coincident copper (50-100ppm) and gold (>1g/t) geochemical anomalies in stream sediment samples.

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Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

The Sungai Mansur Target is located in the southern part of the Mansur region and contains anomalous
copper in stream sediment samples (up to 150 ppm copper).

The North Mansur, Air Mansur and Sungai Mansur Prospects are shown in Figure 6.

Figure 6: Mansur Prospect - Aeromagnetic and Copper Stream Sediments

Tumbang Huoi and Tisoi Prospects

Tumbang Houi Prospect is located in the southwest of the KSK Copper Project within a large circular
structure, transected by major north and north-west trending faults. The geology at Tumbang Houi is
characteristic of a caldera setting. A 100m diameter highly silicified milled breccia, containing clasts up to
several metres in size, is located at the western end of the survey grid.

Copper, gold and molybdenum mineralization is contained within porphyry style quartz veins. Pyrite is
ubiquitous throughout the area. Early stage mapping, soil sampling and drilling was undertaken during the
early 1990’s. The primary focus being gold mineralization, as locals had panned the rivers draining the
area for many years.

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Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

Figure 7: Course Gold Panned from Tumbang Huoi Prospect

Figure 7 shows coarse gold panned from Sungai Putih (white stream) which is located in the western
portion of the Tumbang Huoi survey grid.

Drill holes DDH4, DDH6, DDH8 and DDH10 were drilled above the eastern margin of a 3D magnetic
anomaly. These holes contain a variety of silicified volcaniclastics and diorite porphyries displaying strong
clay alteration and pyrite mineralization. Magnetite and chalcopyrite were observed in quartz veins
associated with potassic alteration within a diorite in DDH8.

Figure 8: Tumbang Huoi - Drill Core from DDH8

Source: Kalimantan

Figure 8 shows drill core from DDH8 on the eastern margin of the magnetic anomaly showing potassic
altered diorite porphyry containing chalcopyrite and magnetite veins.

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Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

Figure 9: Tumbang Huoi - Drill Holes and Cu Assay Distribution from Stream Sediments (SS), Rock
Chip (RC), and Soil (SO) Samples

Figure 9 shows the distribution of samples for Tambang Huoi and three target areas including:

a) Sub Prospect 1 – the area contains rock chip samples (100-1300ppm Cu) and soil samples with
anomalous copper. The copper anomaly is situated on top of a magnetic anomaly and drilling

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Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

intersected a medium-coarse grained plagioclase-hornblende-biotite+/-quartz diorite porphyry

which has anomalous molybdenum values, but very low copper assays.
b) Sub Prospect 2 – the area is centered around previous holes DDH-5 and DDH-11. It was recently
determined from re-logging that both holes intersected fine-grained plagioclase-hornblende-biotite
diorite porphyry intrusives. Both holes contain elevated copper values (DDH 11 from 300-1000ppm
Cu and DDH 5 from 500-2000ppm Cu).
c) Sub Prospect 3 – the area is located west of TH02-01 and contains sheeted quartz viens and faults
which contain anomalous copper and molybdenum. The veins are hosted by granodiorite and have
widths from a few centimetres up to 0.3m.

Baroi Prospect

The Baroi Prospect contains near-surface copper-rich base-metal vein and breccia swarms and a
hypothetical deep copper-gold porphyry target. For example, BF030 intersected high grade near surface
copper mineralization (covelite and chalcopyrite) with 41.9m at 3.18% Cu and 101g/t Ag (including 11.1m at
11.1% Cu and 296g/t Ag), as shown in Figure 10.

Figure 10: Baroi - BF030 Core

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Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

Looking Ahead:
3D inversion modeling of airborne gravity and magnetic data is expected to assist in defining the extent of
the Beruang Kanan VHMS-system and, combined with recent drilling results, will help Kalimantan Gold
refine and focus future drilling programs.

With the withdrawal of SK LLC effective January 31, 2014, talks have begun with a number of Indonesian
groups who had previously expressed interest in the KSK CoW during 2013. The Board continues to make
contact with these parties and others to discuss possible partnerships and ways forward.

SK LLC funded over $35 million of exploration expenditures since April 2011 on the KSK CoW, leaving the
Company with a wealth of exploration data and multiple drill targets. During their involvement, over
30,000m of drilling was completed, over 28,000 samples were analyzed, 4,762 line kilometers of airborne
geophysical surveys were completed, and 24,363 ha of the KSK CoW was covered with a high resolution
Lidar imaging survey. A drill plan had been prepared to expand the identified zone of mineralization at
Beruang Kanan where the two most recent drill holes, BK57 and BK58, both intersected significant
mineralization, as discussed above.

With regard to the Jelai IUP, the Company announced that the Indonesian Ministry of Forestry granted JCM
an extension to its Borrow and Use Exploration Forestry Permit (IPPKH). The permit, which is renewable,
extends the authorization for the Company to conduct exploration activities until December 16, 2015. It
covers all the existing permitted areas, namely the Mewet and ten of the other 12 Jelai IUP prospects,
comprising 4,675 hectares of the 5,000 hectare IUP.

The Company has been in discussions with a number of major mineral companies regarding a potential
joint venture or similar arrangement in respect of Jelai IUP. These discussions are continuing and some
site visits have already been undertaken.

Corporate Social Responsibility (CSR) Program

Yayasan Tambuhak Sinta (“YTS”) has been funded by SK LLC, by way of an advance to KSK, until late
2014, to work in many of the Dayak villages located along the Kahayan River, just outside of the KSK CoW
area. There are no Dayak villages located within the KSK CoW area. YTS’s program is focused on
strengthening governance in the area, and is helping communities take greater responsibility for their own
development agenda through participatory planning, institution strengthening and economic development.

This initiative enables communities to engage more effectively with local government in order to access
improved services and programs in education, health, infrastructure and economic livelihoods.

YTS provides training and technical assistance to improve the capabilities of villagers in growing crops,
raising animals, and managing local resources. In 2013, this support concentrated on vegetables, fish, pigs
and rubber.

In collaboration with the local credit union, YTS provided training on savings, credit, and small business
development. By joining the credit union, people establish savings accounts and can access credit for their
household or business.

At district level, YTS has a two-year program to improve the capacity of district staff to improve their annual
planning and budgeting mechanism. This will result in delivering better support programs and services to
communities.

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Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

In 2013, the YTS CSR Program accounted for approximately 4% of the total KSK expenditure ($720,279),
and includes:
a. Village Development Planning
b. Village Development Fund & Technical Support for Economic Livelihoods
c. Village Institutional Development
d. Kalimantan Kids Club – a scholarship program
e. Information & Communication Media and Events

Qualified Person
All technical data, as disclosed in this MD&A, unless otherwise noted, has been reviewed and verified by
the Company's Qualified Person for the Company’s mineral projects, Dr. Peter Pollard. Dr. Pollard is a
Member of the Australasian Institute of Mining and Metallurgy (Chartered Professional). Dr. Pollard is a
director of Kalimantan Gold and has sufficient experience which is relevant to the style of mineralization and
type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person
under the JORC Code and as a Qualified Person under NI 43-101.

Aim Rule 26
We confirm that our website (www.kalimantan.com) includes the information required by AIM Rule 26.

Results of Operations
Results of operations for the year ended December 31, 2013
The Company incurred a loss for the year ended December 31, 2013, of $325,805 (2012 – profit of
$62,715).
The more significant differences between the fiscal years were exploration costs, legal fees, management
fees, and share-based compensation.

• Exploration costs: Fiscal 2013 – $89,248; (Fiscal 2011 – ($11,235))

In the year ended December 31, 2013, the gross exploration costs were $18,062,875 (2012 -
$15,906,095) with recoveries from exploration partners of $17,973,627 (2012 - $15,917,330), with
net exploration expenditures of $89,248 (2012 – ($11,235)) for the year then ended. The net
credit in fiscal 2012 was due to the charge back of equipment to the SK LLC joint venture. Gross
exploration expenditures in fiscal 2013 on the KSK CoW were about 27% higher than the 2012
comparative year which is a reflection of the increased exploration work performed. For Jelai, the
current 2013 fiscal year saw a significant decrease in exploration spending as Tigers was no
longer involved in the project.
• Legal fees: Fiscal 2013 - $38,490 (Fiscal 2012 - $24,704)
Legal fees have now generally returned to normal levels for 2013, despite being somewhat higher
than the 2012 comparative year.
• Management fees: Fiscal 2013 – ($611,980) (Fiscal 2012 – ($703,991))
Management fees relate to being the operator of the KSK CoW and Jelai IUP joint operations (in
2012, this included being operator of the Jelai IUP pursuant to an agreement with Tigers Realm
Metals Pty Ltd. (“Tigers”)), and are directly correlated with the magnitude of the gross exploration
expenditures funded by our joint venture partners and our continuance as operator. In fiscal
2013, the Company earned $611,980 (2012 - $575,697) for being the operator of the KSK CoW,
and during the same period the Company earned management fees of $nil (2012 - $128,294) as
operator pursuant to the terminated Tigers agreement.
• Share-based compensation: Fiscal 2013 - $236,633 (Fiscal 2011 - $51,015)
The 2013 expense of $236,633 relates to the calculated fair value of the options granted on July
1, 2013, while the 2012 expense is related to the continued vesting of options granted to the CEO
on April 21, 2011. The fair value of the options granted is calculated using the Black-Scholes
option pricing model.
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Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

Selected Annual Information

Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended

December 31 December 31 December 31
2013 2012 2011
audited audited audited
Statement of Operations
Net revenues $ Nil $ Nil $ Nil
Net income / (loss) (325,805) 62,715 (1,422,230)
Net income (loss)
per share (0.00) 0.00 (0.01)
Statement of financial
position
Total assets $ 1,544,184 $ 5,041,607 $ 1,210,901
Long term debt Nil Nil Nil
Dividends Nil Nil Nil

Summary of Quarterly Results

The unaudited financial results for each of the eight most recently completed quarters are summarized
below:
3 months 3 months 3 months 3 months 3 months 3 months 3 months 3 months
ended ended ended ended ended ended ended ended
December September June March December September June March
31, 2013 30, 2013 30, 2013 31, 2013 31, 2012 30, 2012 30, 2012 31, 2012
$ $ $ $ $ $ $ $
Total
- - - - - - - -
revenues
Profit (loss)
for the (194,226) (245,046) 88,316 25,151 235,674 42,616 (80,834) (134,741)
quarter
Basic and
diluted profit (0.00) (0.00) 0.00 0.00 0.00 0.00 (0.00) (0.00)
(loss) per
share

The Company is an exploration stage enterprise. At this time any issues of seasonality or market
fluctuations have no significant impact. The Company currently expenses all its mineral exploration costs
and general and administration costs and these amounts are included in the loss for each quarter. The
Company’s finances determine the levels of exploration. Period over period variances will occur from time-
to-time for non-cash items including the granting of stock options and the resulting stock-based
compensation expense for that period.

Fourth quarter
The Company began the fourth quarter with $1,069,736 cash. Cash of $176,413 was used in operating
activities; investing activities provided $77,910 in cash; and the Company recorded an unrealized foreign
exchange gain of $2,231 on its cash, to end the quarter and the year with $973,464 cash.

Liquidity
The Company began the current fiscal year with $3,058,382 in cash. Operating activities used $1,793,697
in cash; investing activities used $398,403 to purchase equipment, provided $97,726 as recovery of
equipment purchases from a joint venture partner, and provided $2,562 from the sale of equipment;
financing activities had no cash effects in the year; and recorded $6,894 of unrealized foreign exchange
gain on cash balances, to end the year with $973,464 in cash, of which $363,563 is held exclusively for use
pursuant to the KSK Agreement.
The Company is likely to require additional financing, through various means including but not limited to
equity financing, for continued operations and for the substantial capital expenditures required to achieve
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Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

planned principal operations. The Company plans to raise additional financial resources through equity
financings during the next six to twelve months. While the Company has been successful in the past in
obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or
that such financing will be on terms acceptable to the Company. These factors indicate the existence of a
material uncertainty that may cast significant doubt on the Company's ability to continue as a going
concern.

Capital Resources
At the date of this MD&A, the Company has 11,225,000 stock options outstanding. Upon an increase in the
Company’s share price and share volume traded, it would be expected that the stock options would likely
be exercised, thereby contributing additional cash to the treasury.
The Company has met its expenditure requirements pursuant to its KSK CoW for all exploration phases of
the contract due to the ability to carry over excess work expenditures.

Contingency
During 2011, the Indonesian tax authorities conducted an audit of PT Jelai Cahaya Minerals (“JCM”) for the
2009 tax year. The majority of the review focused on the deductibility of expenditures in Indonesia and
adjusted the tax loss carry forwards. The most material outcome from the audit related to the tax authorities
deeming that the intercompany loans made by the Company to JCM should have had interest accrued at
the rate of 8% per annum with withholding tax of 20%, therefore becoming payable to the Indonesian
government. The Company believes the tax assessment is without basis. To have the appeal heard by the
tax court, the Company was required to pay a deposit of Rp 440,139,447, an amount equal to the 2009 tax
exposure as calculated by the tax authorities. The outcome of the tax appeal process and any tax
assessments due and payable arising from that process is not determinable at this time. The intercompany
loans made by the Company to JCM were converted to equity on May 23, 2012.

Transactions with Related Parties

a) The Company’s related parties consist of companies owned by executive officers and directors as
follows:
Name Nature of transactions
Golden Oak Corporate Services Limited (“Golden Oak”) Financial reporting and corporate
compliance services
Pollard Geological Services PTY Ltd. (“Pollard”) Non-executive Chairman and technical
advisor
Romfal Corporate Pty Ltd. (“Romfal”) Chief Executive Officer

The Company incurred the following fees in the normal course of operations in connection with
companies owned by key management and directors.

December 31, December 31,

2013 2012
Consulting fees – Golden Oak (Doris Meyer’s company) $ 101,993 $ 117,902
Consulting fees – Romfal (Faldi Ismail’s company) 120,000 70,000
Total $ 221,993 $ 187,902

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Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

b) Compensation of key management personnel:

The remuneration of directors and other members of key management personnel, including amounts
disclosed above, during the years ended December 31, 2013, and 2012 were as follows:

December 31, December 31,

2013 2012
Consulting fees $ 221,993 $ 187,902
Salaries, wages and related costs (exploration and
evaluation expenditures) 248,572 248,572
(1)
Directors fees to non-management directors 47,000 24,000
Share-based compensation 117,323 51,015
Total $ 634,888 $ 511,489

(1) The December 31, 2013 figures Include $8,000 paid to Francis De Sousa for his eight-month tenure as a
Director from August 2012 to March 2013.

At December 31, 2013, an amount of $11,456 (December 31, 2012 - $49,944) was owed to key
management personnel and directors, and is included in trade and other payables.

Future Canadian Accounting Standards

Effective for annual periods beginning on or after January 1, 2014:

Amendments to IAS 32 Financial Instruments: Presentation

The amendments to the disclosure requirements in IFRS 7 Financial Instruments: Disclosure
require information about all recognised financial instruments that are set off in accordance with
paragraph 42 of IAS 32. The amendments also require disclosure of information about recognised
financial instruments subject to enforceable master netting arrangements and similar agreements
even if they are not set off under IAS 32.

The amendments to IAS 32 are not effective until annual periods beginning on or after 1 January 2014.
However, the new offsetting disclosure requirements are effective sooner - for annual periods beginning
on or after 1 January 2013, and interim periods within those annual periods. The amendments need to
be provided retrospectively to all comparative periods.

Effective for annual periods not yet announced:

New standard IFRS 9 Financial Instruments
Partial replacement of IAS 39 Financial Instruments: Recognition and Measurement. This standard
simplifies the current measurement model for financial instruments under IFRS and establishes two
measurement categories for financial assets: amortized cost, and fair value. The existing IAS 39
categories of loans and receivables, held to maturity investments, and available for sale financial
assets will be eliminated.

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Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

Management of Capital

The Company manages common shares and stock options as capital. The Company’s objectives when
managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue
the development of its mineral properties and to maintain a flexible capital structure which optimizes the
costs of capital at an acceptable risk. The Company does not have any externally imposed capital
requirements to which it is subject.

The Company manages the capital structure and makes adjustments to it in light of changes in economic
conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure,
the Company may attempt to issue new shares, issue debt, or acquire or dispose of assets.

In order to facilitate the management of its capital requirements, the Company prepares expenditure
budgets that are updated as necessary depending on various factors, including successful capital
deployment and general industry conditions.

In order to maximize ongoing exploration efforts, the Company does not pay out dividends. The Company’s
investment policy is to keep its cash treasury on deposit in an interest bearing Canadian chartered bank
account. Cash consists of cash on hand, balances with banks and investments in highly liquid instruments.
The Company considers all highly liquid instruments with maturity of three months or less at the time of
issuance to be cash and the fair value approximates the carrying value.

Financial Instruments and Related Risks

Categories of Financial Assets and Financial Liabilities

Financial instruments are classified into one of the following categories: FVTPL; held-to-maturity
investments; loans and receivables; available-for-sale; or other liabilities. The carrying values of the
Company’s financial instruments are classified into the following categories:

December 31, December 31,

Financial Instrument Category
2013 2012
Cash FVTPL $ 973,464 $ 3,058,382
Loans and
Government deposit 36,110 48,415
Receivables
Loans and
Trade and other receivables 268,460 1,886,595
Receivables
Trade and other payables Other liabilities 706,658 4,128,664

The Company’s financial instruments recorded at fair value require disclosure about how the fair value
was determined based on significant levels of inputs described in the following hierarchy:
Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the
reporting date. Active markets are those in which transactions occur in sufficient
frequency and value to provide pricing information on an ongoing basis.
Level 2 - Pricing inputs are other than quoted prices in active markets included in Level 1. Prices
in Level 2 are either directly or indirectly observable as of the reporting date. Level 2
valuations are based on inputs including quoted forward prices for commodities, time
value and volatility factors, which can be substantially observed or corroborated in the
market place.
Level 3 - Valuations in this level are those with inputs for the asset or liability that are not based
on observable market data.
The recorded amounts for cash are Level 1 in the fair value categories.

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Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

The Company’s risk exposures and the impact on the Company’s financial instruments are summarized
as follows:

Credit Risk
Credit risk is the risk of potential loss to the Company if a counterparty to a financial instrument fails to
meet its contractual obligations. The Company’s credit risk is primarily attributable to its liquid financial
assets, including cash, receivables, and balances receivable from the government. The Company
limits the exposure to credit risk in its cash by only investing its cash with high-credit quality financial
institutions in business and savings accounts, guaranteed investment certificates and in government
treasury bills which are available on demand by the Company for its programs.

Liquidity Risk
Liquidity risk is the risk that the Company will not have the resources to meet its obligations as they fall
due. The Company manages this risk by closely monitoring cash forecasts and managing resources to
ensure that it will have sufficient liquidity to meet its obligations. All of the Company’s current financial
liabilities are anticipated to fall due within the next sixty days.

Market Risk
Market risk is the risk of loss that may arise from changes in market factors such as interest rates,
foreign exchange rates, and commodity and equity prices. These fluctuations may be significant.
a) Interest Rate Risk: The Company is exposed to interest rate risk to the extent that its cash
balances bear variable rates of interest. The interest rate risks on cash and short-term investments
and on the Company’s obligations are not considered significant.
b) Foreign Currency risk: The Company is exposed to the financial risk related to the fluctuation of
foreign currency exchange rates. A portion of the Company’s cash is held in Canadian (CDN”)
dollars and the Company expects to continue to raise funds in Europe, Canada, and Australasia.
The Company conducts its business in Indonesia in Indonesian Rupiah (“Rp”) with a significant
portion of expenditures in that country denominated in US dollars and in addition, a portion of the
Company’s business is conducted in Canadian dollars (“CAD”), Pounds Sterling (“GBP”) and the
Australian (“AUS”) dollar. As such, it is subject to risk due to fluctuations in the exchange rates
between the US dollar and each of the Rp, GBP and CAD and AUS dollars. A significant change in
the currency exchange rates between the US dollars relative to foreign currencies could have an
effect on the Company’s results of operations, financial position or cash flows. The Company has
not hedged its exposure to currency fluctuations.
The Company’s exposure to the foreign currency amount in US dollars on financial instruments is
as follows:
As at December 31, 2013 As at December 31, 2012
Foreign currency Amount in US Foreign currency Amount in US
Currency Currency
amount dollars amount dollars
Cash CAD 48,535 45,633 CAD 74,400 74,779
Rp 192,452,121 15,789 - 791,444,654 82,049
Government
Rp 440,139,447 36,110 Rp 440,139,447 48,415
deposits
Trade and CAD (966) (908) CAD (363) (365)
other GBP (4,313) (7,375) GBP (4,407) (7,109)
payables AUD ( -) ( -) AUD (2,888) (3,000)
Rp (668,310,681) (54,829) Rp (1,776,262,670) (184,145)
34,420 10,624

Based upon the above net exposures and assuming that all other variables remain constant, a 10%
depreciation of the US dollar against the GBP and CAD and AUS dollars would result in a increase
in the loss of approximately $3,440 in the year ended December 31, 2013, ($1,060 in the year
ended December 31, 2012). This sensitivity analysis includes only outstanding foreign currency
denominated monetary items.
Page 17 of 22
Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

c) Commodity price risk - While the value of the Company’s core mineral resource properties, the KSK
CoW and the Jelai IUP, are related to the price of copper and gold and the outlook for these
minerals, the Company currently does not have any operating mines and hence does not have any
hedging or other commodity based risks in respect of its operational activities.
Historically, gold and copper prices have fluctuated significantly, and are affected by numerous
factors outside of the Company’s control, including but not limited to: industrial and retail demand;
central bank lending; forward sales by producers and speculators; levels of worldwide production;
short-term changes in supply and demand because of speculative hedging activities; and other
factors related specifically to gold.

Political Uncertainty
In conducting operations in Indonesia, the Company is subject to considerations and risks not typically
associated with companies operating in North America. These include risks such as the political,
economic and legal environments. Among other things, the Company's results may be adversely
affected by changes in the political and social conditions in Indonesia, and by changes in governmental
policies with respect to mining laws and regulations, anti-inflationary measures, currency conversion
and remittance abroad, and rates and methods of taxation.

Forward Looking Statements

This MD&A contains forward-looking statements that are based on the Company’s current expectations and
estimates. Forward-looking statements are frequently characterized by words such as “plan”, “expect”,
“project”, “intend”, “believe”, “anticipate”, “estimate”, “suggest”, “indicate” and other similar words or
statements that certain events or conditions “may” or “will” occur. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors that could cause actual events or results to differ
materially from estimated or anticipated events or results implied or expressed in such forward-looking
statements. Such factors include, among others: the actual results of current exploration activities;
conclusions of economic evaluations; changes in project parameters as plans to continue to be refined;
possible variations in ore grade or recovery rates; accidents, labour disputes and other risks of the mining
industry; delays in obtaining governmental approvals or financing; and fluctuations in metal prices. There
may be other factors that cause actions, events or results not to be as anticipated, estimated or intended.
Any forward-looking statement speaks only as of the date on which it is made and, except as may be
required by applicable securities laws, the Company disclaims any intent or obligation to update any
forward-looking statement, whether as a result of new information, future events or results or otherwise.
Forward-looking statements are not guarantees of future performance and accordingly undue reliance
should not be put on such statements due to the inherent uncertainty therein.

Additional Disclosure for Venture Issuers without Significant Revenue

The components of exploration costs are described in Note 8 to the Financial Report.

Outstanding Share Data

At December 31, 2013, the authorized share capital comprised $5,000,000 divided into 500,000,000
common shares at a par value of $0.01 each. All issued shares are fully paid.

Common Shares Stock

Issued and Options
Outstanding
Balance at December 31, 2013 and
171,407,156 11,225,000
at the date of this MD&A

Page 18 of 22
Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

Risks
The Company is subject to risks and challenges similar to other companies in a comparable stage of
development. These risks include, but are not limited to, continuing losses, dependence on key individuals,
and the ability to secure adequate financing to meet minimum capital required to successfully complete its
projects and continue as a going concern. These factors should be reviewed carefully.

The following risk factors, in addition to the risks noted above in the “Financial instruments and Related
Risks” section, should be given special consideration when evaluating trends, risks and uncertainties
relating to the Company’s business.

Exploration, Development and Production Risks

The exploration for and development of minerals involves significant risks, which even a combination of
careful evaluation, experience and knowledge of management and key employees and contractors of the
Company may not eliminate. Few properties which are explored are ultimately developed into producing
mines. There can be no guarantee that the estimates of quantities and qualities of minerals disclosed will
be economically recoverable. With all mining operations there is uncertainty and, therefore, risk associated
with operating parameters and costs resulting from the scaling up of extraction methods tested in pilot
conditions. Mineral exploration is speculative in nature and there can be no assurance that any minerals
discovered will result in the definition of a mineral resource. The Company’s operations will be subject to all
of the hazards and risks normally encountered in the exploration, development and production of minerals.
These include unusual and unexpected geological formations, rock falls, seismic activity, flooding and other
conditions involved in the extraction of material, any of which could result in damage to, or destruction of,
mines and other producing facilities, damage to life or property, environmental damage and possible legal
liability. Although precautions to minimize risk will be taken, operations are subject to hazards that may
result in environmental pollution and consequent liability that could have a material adverse impact on the
business, operations and financial performance of the Company. Substantial expenditures are required to
establish ore reserves through drilling, to develop metallurgical processes to extract the metal from the ore
and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any
site chosen for mining. Although substantial benefits may be derived from the discovery of a major
mineralized deposit, no assurance can be given that minerals will be discovered in sufficient quantities to
justify commercial operations or that funds required for development can be obtained on a timely basis.
The economics of developing gold, copper and other mineral properties is affected by many factors,
including the cost of operations, variations in the grade of ore mined, fluctuations in metal markets, costs of
processing equipment and such other factors as government regulations, including regulations relating to
royalties, allowable production, importing and exporting of minerals and environmental protection. The
remoteness and restrictions on access of the Company’s mineral properties may have an adverse effect on
profitability as a result of higher infrastructure costs. There are also physical risks to the exploration
personnel working in the terrain in which the Company’s mineral properties are located, which is subject to
poor climate conditions. The long-term commercial success of the Company depends on its ability to
explore, develop and commercially produce minerals from its mineral property and to locate and acquire
additional properties worthy of exploration and development for minerals. No assurance can be given that
the Company will be able to locate satisfactory properties for acquisition or participation. Moreover, if such
acquisitions or participations are identified, the Company may determine that current markets, terms of
acquisition and participation or pricing conditions make such acquisitions or participation uneconomic.

Substantial Capital Requirements

The management of the Company anticipates that it may make substantial future capital expenditures for
the acquisition, exploration, development and production its mineral properties. As the Company will be at
the exploration stage with no revenue being generated from the exploration activities on its mineral
properties, the Company may have limited ability to raise the capital necessary to undertake or complete
future exploration work, including drilling programs. There can be no assurance that debt or equity
financing will be available or sufficient to meet these requirements or for other corporate purposes or, if debt
or equity financing is available, that it will be on terms acceptable to the Company. Moreover, future
activities may require the Company to alter its capitalization significantly. The inability of the Company to
access sufficient capital for its operations could have a material adverse effect on the Company’s financial
Page 19 of 22
Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

condition, results of operations or prospects. In particular, failure to obtain such financing on a timely basis
could cause the Company to forfeit its interest in its mineral property, miss certain acquisition opportunities
and reduce or terminate its operations.

Competition
The mining industry is highly competitive. Many of the Company’s competitors for the acquisition,
exploration, production and development of mineral properties, and for capital to finance such activities,
include companies that have greater financial and personnel resources available to them than the
Company.

Volatility of Mineral Prices

The market price of any mineral is volatile and is affected by numerous factors that are beyond the
Company’s control. These include international supply and demand, the level of consumer product
demand, international economic trends, currency exchange rate fluctuations, the level of interest rates, the
rate of inflation, global or regional political events and international events as well as a range of other
market forces. Sustained downward movements in mineral market prices could render less economic, or
uneconomic, some or all of the mineral extraction and/or exploration activities to be undertaken by the
Company.

Mineral Reserves / Mineral Resources

The Company’s mineral properties are considered to be in the early exploration stage and do not contain a
known body of commercial minerals.

Recent Global Financial Conditions

Recent global financial conditions have been subject to increased volatility. Access to public financing has
been negatively impacted by both sub-prime mortgages and the liquidity crisis affecting the asset-backed
commercial paper market. These factors may impact the ability of the Company to obtain equity or debt
financing in the future and, if obtained, on terms favorable to the Company. If these increased levels of
volatility and market turmoil continue, the Company’s operations could be adversely impacted and the value
and the price of the shares of the Company could be adversely affected.

Environmental Risks
All phases of the mining business present environmental risks and hazards and are subject to
environmental regulation pursuant to a variety of international conventions and state and municipal laws
and regulations. Environmental legislation provides for, among other things, restrictions and prohibitions on
spills, releases or emissions of various substances produced in association with mining operations. The
legislation also requires that wells and facility sites be operated, maintained, abandoned and reclaimed to
the satisfaction of applicable regulatory authorities. Compliance with such legislation can require significant
expenditures and a breach may result in the imposition of fines and penalties, some of which may be
material. Environmental legislation is evolving in a manner expected to result in stricter standards and
enforcement, larger fines and liability and potentially increased capital expenditures and operating costs.
Environmental assessments of proposed projects carry a heightened degree of responsibility for companies
and directors, officers and employees. The cost of compliance with changes in governmental regulations
has the potential to reduce the profitability of operations.

Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement
actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease
or be curtailed, and may include corrective measures requiring capital expenditures, installation of
additional equipment, or remedial actions. Parties engaged in mining operations may be required to
compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal
fines or penalties imposed for violations of applicable laws or regulations and, in particular, environmental
laws.

Page 20 of 22
Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

Amendments to current laws, regulations and permits governing operations and activities of mining
companies, or more stringent implementation thereof, could have a material adverse impact on the
Company and cause increases in capital expenditures or production costs or reduction in levels of
production at any future producing properties or require abandonment or delays in the development of new
mining properties.

Reliance on Key Personnel

The success of the Company will be largely dependent upon the performance of its management and key
employees and contractors. In assessing the risk of an investment in the shares of the Company, potential
investors should realize that they are relying on the experience, judgment, discretion, integrity and good
faith of the proposed management of the Company.

Conflicts of Interest
Certain of the directors and officers of the Company will be engaged in, and will continue to engage in,
other business activities on their own behalf and on behalf of other companies (including mineral resource
companies) and, as a result of these and other activities, such directors and officers of the Company may
become subject to conflicts of interest. In the event that a director or senior officer has a material interest in
a contract or proposed contract or agreement that is material to the Company, the director or senior officer
must disclose his or her interest in such contract or agreement and a director must refrain from voting on
any matter in respect of such contract or agreement. To the knowledge of the management of the
Company, as at the date hereof, there are no existing or potential material conflicts of interest between the
Company and a director or officer of the Company.

Dividends
To date, the Company has not paid any dividends on its outstanding common shares. Any decision to pay
dividends on the shares of the Company will be made by the Board on the basis of the Company’s
earnings, financial requirements and other conditions.

Substantial number of authorized but unissued shares

The Company has a substantial number of common shares which may be issued by the Board without
further action or approval of the Company’s shareholders, except in limited circumstances. While the Board
is required to fulfill its fiduciary obligations in connection with the issuance of such shares, the shares may
be issued in transactions with which not all shareholders agree, and the issuance of such shares will cause
dilution to the ownership interests of the Company’s shareholders.

Permits and Licenses

The activities of the Company are subject to government approvals, various laws governing prospecting,
development, land resumptions, production taxes, labour standards and occupational health, mine safety,
toxic substances and other matters, including issues affecting local native populations. Amendments to
current laws and regulations governing operations and activities of exploration and mining, or more
stringent implementation thereof, could have a material adverse impact on the business, operations and
financial performance of the Company. Further, the mining licenses and permits issued in respect of its
mineral property may be subject to conditions which, if not satisfied, may lead to the revocation of such
licenses. In the event of revocation, the value of the Company’s mineral properties may decline.

Limited Operating History

The Company is a company with limited successful operating history and has yet to generate a profit from
its operating activities. The Company will be subject to all of the business risks and uncertainties
associated with any business enterprise, including the risk that it will not achieve its growth objective. The
Company anticipates that it may take several years to achieve positive cash flow from operations. Even if
the Company does undertake exploration activity on its mineral properties, there is no certainty that the
Company will produce revenue, operate profitably or provide a return on investment in the future.

Page 21 of 22
Kalimantan Gold Corporation Limited
MANAGEMENT DISCUSSION AND ANALYSIS
For the year ended December 31, 2013

Uninsured Risks
The Company, as a participant in mining and exploration activities, may become subject to liability for
hazards that cannot be insured against or against which it may elect not to be so insured because of high
premium costs. Furthermore, the Company may incur a liability to third parties (in excess of any insurance
coverage) arising from negative environmental impacts or any other damage or injury.

Unforeseen Expenses
While the Company is not aware of any expenses that may need to be incurred that have not been taken
into account, if such expenses were subsequently incurred, the expenditure proposals of the Company may
be adversely affected.

Other information
Additional information relating to the Company is available for viewing on SEDAR at www.sedar.com and at
the Company’s web site www.kalimantan.com.

Page 22 of 22
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2013 and 2012

(In United States dollars, unless otherwise noted)

 INDEPENDENT AUDITORS’ REPORT

To the Shareholders of
Kalimantan Gold Corporation Limited

We have audited the accompanying consolidated financial statements of Kalimantan

Gold Corporation Limited, which comprise the consolidated statements of financial
position as at December 31, 2013 and 2012, and the consolidated statements of
comprehensive profit (loss), changes in equity and cash flows for the years then
ended, and a summary of significant accounting policies and other explanatory
information.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these

consolidated financial statements in accordance with International Financial
Reporting Standards, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these consolidated financial statements

based on our audits. We conducted our audits in accordance with Canadian generally
accepted auditing standards. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts
and disclosures in the consolidated financial statements. The procedures selected
depend on the auditors’ judgment, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether due to fraud or error.
In making those risk assessments, the auditors consider internal control relevant to
the entity’s preparation and fair presentation of the consolidated financial statements
in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.

A member firm of Ernst & Young Global Limited

 -2-

We believe that the audit evidence we have obtained in our audits is sufficient and
appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of Kalimantan Gold Corporation Limited as at
December 31, 2013 and 2012, and its financial performance and its cash flows for the
years then ended in accordance with International Financial Reporting Standards.

Emphasis of matter

Without qualifying our opinion, we draw attention to note 1 in the consolidated

financial statements which indicates that Kalimantan Gold Corporation Limited
incurred a loss of $325,805 during the year ended December 31, 2013, and as of that
date, Kalimantan Gold Corporation Limited had an accumulated deficit of
$26,690,620. These conditions, along with other matters as set forth in note 1,
indicate the existence of a material uncertainty that may cast significant doubt on
Kalimantan Gold Corporation Limited’s ability to continue as a going concern.

Vancouver, Canada,
April 24, 2014. Chartered Accountants

A member firm of Ernst & Young Global Limited

KALIMANTAN GOLD CORPORATION LIMITED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(expressed in United States dollars, unless otherwise noted)

December 31, December 31,

Note 2013 2012
ASSETS
Current assets
Cash 5 $ 973,464 $ 3,058,382
Government deposit 6 & 15 36,110 48,415
Trade and other receivables 7 268,460 1,886,595
1,278,034 4,993,392

Non-current assets
Security deposit 21,186 24,100
Equipment 8 244,964 24,115
$ 1,544,184 $ 5,041,607

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
Trade and other payables 10 $ 706,658 $ 4,128,664
Provision for employee service entitlements 11 178,059 -
884,717 4,128,664
Non-current liabilities
Provision for employee service entitlements 11 - 164,304
884,717 4,292,968

Shareholders' equity
Share capital 12 1,674,842 1,674,842
Equity reserves 12 25,675,245 25,438,612
Deficit (26,690,620) (26,364,815)
659,467 748,639
$ 1,544,184 $ 5,041,607

Nature of operations 1
Commitments 14
Contingency 15
Subsequent event 19

These consolidated financial statements were authorized for issue by the Board of Directors on April 24, 2014.

They are signed on the Company’s behalf by:

/s/ Peter Pollard /s/ Faldi Ismail

Peter Pollard Faldi Ismail
Director Director

The accompanying notes form an integral part of these consolidated financial statements
KALIMANTAN GOLD CORPORATION LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE PROFIT (LOSS)
(expressed in United States dollars, unless otherwise noted)

For the year ended

December 31, December 31,
Note 2013 2012

Expenses
Accounting and audit $ 59,724 $ 72,303
Consultants 13 353,427 342,394
Directors fees 47,000 24,000
Exploration and evaluation expenditures, net 9 89,248 (11,235)
Investor relations 10,796 5,582
Legal 38,490 24,704
Management fees 9 (611,980) (703,991)
Office and administrative services 8,562 8,934
Share-based compensation 12(d) 236,633 51,015
Telephone and facsimile 4,019 2,461
Transfer agent, filing and exchange fees 77,724 89,226
Travel and accommodation 37,744 65,197
351,387 (29,410)

Other items
Foreign exchange gain 25,236 4,326
Interest income 346 28,979
25,582 33,305
Profit (loss) and comprehensive profit (loss)
for the year $ (325,805) $ 62,715

Basic and diluted profit (loss) per common share $ (0.00) $ 0.00

Weighted average number of shares outstanding 171,407,156 169,303,046

The accompanying notes form an integral part of these consolidated financial statements
KALIMANTAN GOLD CORPORATION LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(expressed in United States dollars, unless otherwise noted)

For the year ended

December 31, December 31,
2013 2012
Cash provided from (used for):

Operating activities
Profit (loss) for the year $ (325,805) $ 62,715
Adjustment for non-cash items:
Depreciation 77,266 9,330
Share-based compensation 236,633 51,015
Unrealized foreign exchange gain (25,694) 2,962
Changes in non-cash working capital:
Government deposit - 12,895
Trade and other receivables 1,618,135 (1,774,923)
Trade and other payables (3,422,006) 3,178,640
Provision for employee service entitlements 47,774 59,407
(1,793,697) 1,602,041
Investing activities
Purchase of equipment (398,403) (166,763)
Recovery of equipment 97,726 145,504
Proceeds on sale of equipment 2,562 -
Restricted cash - 209,167
(298,115) 187,908
Financing activities
Share issues - 480,000
Share issue costs - (6,770)
- 473,230

Unrealized foreign exchange loss on cash 6,894 3,692

Increase / (decrease) in cash (2,084,918) 2,266,871

Cash, beginning of the year 3,058,382 791,511

Cash, end of the year $ 973,464 $ 3,058,382

Supplementary information:
Interest paid $ - $ -
Income taxes paid - -

The accompanying notes form an integral part of these consolidated financial statements
KALIMANTAN GOLD CORPORATION LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(expressed in United States dollars, unless otherwise noted)

Number of
Amount Equity reserves Deficit Total
shares

Balance, January 1, 2012 165,407,156 $ 1,621,612 $ 24,967,597 $ (26,427,530) $ 161,679

Share issues 6,000,000 60,000 420,000 - 480,000
Share issue costs - (6,770) - - (6,770)
Share-based compensation - - 51,015 - 51,015
Loss and comprehensive loss
- - - 62,715 62,715
for the year
Balance, December 31, 2012 171,407,156 $ 1,674,842 $ 25,438,612 $ (26,364,815) $ 748,639
Share issues - - - - -
Share issue costs - - - - -
Share-based compensation - - 236,633 - 236,633
Loss and comprehensive loss
- - - (325,805) (325,805)
for the year
Balance, December 31, 2013 171,407,156 $ 1,674,842 $ 25,675,245 $ (26,690,620) $ 659,467

The accompanying notes form an integral part of these consolidated financial statements
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

1. NATURE OF OPERATIONS and GOING CONCERN

Kalimantan Gold Corporation Limited (the “Company” or “Kalimantan Gold”) is a publicly listed company
incorporated under the laws of Bermuda. The Company’s shares are listed on the TSX Venture Exchange
(“TSX-V”) and the Alternative Investment Market (“AIM”) of the London Stock Exchange. The Company’s
principal business activities include the acquisition, exploration and development of mineral properties.
The address of the Company in Canada is Unit 1 – 15782 Marine Drive, White Rock, British Columbia,
Canada V4B 1E6. The consolidated financial statements of the Company as at and for the year ended
December 31, 2013, comprise the Company and its subsidiaries. The Company is the ultimate parent.
The Company’s principal mineral property interests are located in Kalimantan, Indonesia.
The Company is in the process of exploring its mineral property interests and has not yet determined
whether any of its properties contain mineral reserves that are economically recoverable. The
recoverability of the amounts spent for mineral properties is dependent upon the existence of economically
recoverable reserves, the ability of the Company to obtain the necessary financing to complete the
exploration and development of its properties, and upon future profitable production or proceeds from the
disposition of the properties.
The operations of the Company will require various licenses and permits from various governmental
authorities which are or may be granted subject to various conditions and may be subject to renewal from
time to time. There can be no assurance that the Company will be able to comply with such conditions and
obtain or retain all necessary licenses and permits that may be required to carry out exploration,
development and mining operations at its projects. Failure to comply with these conditions may render the
licences liable to forfeiture.
These consolidated financial statements have been prepared on a going concern basis which assumes
that the Company will be able to realize its assets and discharge its liabilities in the normal course of
business in the foreseeable future. The Company incurred a loss of $325,805 during the year ended
December 31, 2013, and as of that date, the Company had an accumulated deficit of $26,690,620 and net
working capital of $393,317, including $973,464 in cash.

The Company is likely to require additional financing, through various means including but not limited to
equity financing, for continued operations and for the substantial capital expenditures required to achieve
planned principal operations. The Company plans to raise additional financial resources through equity
financings during the next six to twelve months. While the Company has been successful in the past in
obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or
that such financing will be on terms acceptable to the Company. These factors indicate the existence of a
material uncertainty that may cast significant doubt on the Company's ability to continue as a going
concern.
These financial statements do not include any adjustments to the recoverability and classification of
recorded asset amounts and classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.

2. BASIS OF PRESENTATION
a) Statement of compliance
These consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board
("IASB") and Interpretations of the International Financial Reporting Interpretations Committee
("IFRIC"). The policies applied in these financial statements are based on the IFRS issued and
outstanding as at the date the Board of Directors approved these financial statements for issue.

6
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

2. BASIS OF PREPARATION (continued)

b) Functional and presentation currency
The presentation currency of the Company is the United States dollar.
Items included in the financial statements of each entity in the Company are measured using the
currency of the primary economic environment in which the entity operates (the “functional currency”)
and has been determined for each entity within the Company. The functional currency of Kalimantan
Gold Corporation Limited and all of its subsidiaries is the United States dollar. The functional
currency determinations were conducted through an analysis of the consideration factors identified in
IAS 21 The Effects of Changes in Foreign Exchange Rates.

c) Use of estimates and judgments

The preparation of the consolidated financial statements in conformity with IFRS requires
management to make estimates, judgments and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimates are revised and in any future periods
affected.

(i) Critical accounting estimates

Critical accounting estimates are estimates and assumptions made by management that may result
in a material adjustment to the carrying amount of assets and liabilities within the next financial year
and are the following:

Estimated useful life of equipment

The estimated useful life of equipment which is included in the consolidated statements of financial
position will impact the amount and timing of the related depreciation included in profit or loss.

Share-based compensation
The fair value of stock options issued are subject to the limitation of the Black-Scholes option pricing
model that incorporates market data and involves uncertainty in estimates used by management in
the assumptions. Because the Black-Scholes option pricing model requires the input of highly
subjective assumptions, including the volatility of share prices, changes in subjective input
assumptions can materially affect the fair value estimate.

Recovery of deferred tax assets

Judgment is required in determining whether deferred tax assets are recognized in the statement of
financial position. Deferred tax assets, including those arising from unutilized tax losses, require
management to assess the likelihood that the Company will generate taxable earnings in future
periods, in order to utilize recognized deferred tax assets. Estimates of future taxable income are
based on forecast cash flows from operations and the application of existing tax laws in each
jurisdiction. To the extent that future cash flows and taxable income differ significantly from
estimates, the ability of the Company to realize the net deferred tax assets recorded at the date of
the statement of financial position could be impacted.

Additionally, future changes in tax laws in the jurisdictions in which the Company operates could limit
the ability of the Company to obtain tax deductions in future periods.

The Company has not recorded any deferred tax assets.

7
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

2. BASIS OF PREPARATION (continued)

c) Use of estimates and judgments (continued)
Provision for employee service entitlements
The provision for employee service entitlements estimation is based upon several actuarial inputs,
assumptions, calculations, and estimates using the projected unit credit actuarial valuation method.
Because the actuarial model requires the input of highly subjective assumptions, including interest
rates, retirement dates, and mortality rates, changes in subjective input assumptions can materially
affect the provision estimate. The provision was based on the actual termination liability and
expense known, as all of the Indonesian employees were terminated in January 2014, and the actual
liability was known.

(ii) Critical accounting judgments

Critical judgments in applying accounting policies that have the most significant effect on the
amounts recognized in the consolidated financial statements are the following:

Determination of functional currency

In accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates, management
determined that the functional currency of the Company and its subsidiaries is the United States
dollar. The functional currency determinations were conducted through an analysis of the
consideration factors identified in IAS 21 The Effects of Changes in Foreign Exchange Rates (“IAS
21”). Significant changes to those underlying factors could cause a change to the functional
currency.

3. SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation
These consolidated financial statements include the accounts of the Company and its subsidiaries. Inter-
company balances and transactions, and any unrealized income and expenses arising from inter-company
transactions, are eliminated in preparing the consolidated financial statements.
Proportion of
Place of
Name of subsidiary ownership Principal activity
incorporation
interest
Indokal Limited Hong Kong 100% Holding company
PT Pancaran Cahaya Kahaya (“PCK”) Indonesia 100% Holding company
PT Kalimantan Surya Kencana (“KSK”) Indonesia 100% Owner of KSK CoW
PT Kalimantan Management Consultants
di Palangkaraya (“KMC”) Indonesia 100% Holding company
KLG Singapore Private Limited (“KLG SING”) Singapore 100% Holding company
PT Jelai Cahaya Minerals (“JCM”) Indonesia 100% Owner of Jelai IUP

8
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign currency translation
Transactions in foreign currencies are initially translated to United States dollars, the functional currency of
the Company, at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are re-translated to
the functional currency at the exchange rate at that date.
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. Non-monetary assets and liabilities denominated in
foreign currencies that are measured at fair value are retranslated to the functional currency at the
exchange rate at the date that the fair value was determined.
Foreign currency differences arising on re-translation is recognized in operations.

Equipment
Equipment is carried at cost less accumulated depreciation and accumulated impairment losses, if any.
The cost of an item of equipment consists of the purchase price, any costs directly attributable to bringing
the asset to the location and condition necessary for its intended use and an initial estimate of the costs of
dismantling and removing the items and restoring the site on which it is located.
Depreciation is provided at rates calculated to amortize the costs of equipment less its estimated residual
value, using the straight-line method over five years commencing from the year the assets are put into
service.
An item of equipment is de-recognized upon disposal or when no future economic benefits are expected to
arise from the continued use of the asset. Any gain or loss arising on disposal of the asset, determined as
the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in
profit or loss.
Where an item of equipment is composed of major components with different useful lives, the components
are accounted for as separate items of equipment. Expenditures incurred to replace a component of an
item of equipment that is accounted for separately, including major inspection and overhaul expenditures,
are capitalized.

Exploration and evaluation assets and expenditures

Upon acquiring the legal right to explore a property, all direct costs related to the acquisition of exploration
and evaluation assets are capitalized. All direct costs related to the acquisition of mineral property
interests are capitalized into intangible assets. Exploration and evaluation expenditures incurred prior to
the determination of the feasibility of mining operations and a decision to proceed with development are
charged to operations as incurred. Development expenditures incurred subsequent to a development
decision, and to increase or to extend the life of existing production, are capitalized and will be amortized
on the unit-of-production method based upon estimated proven and probable reserves. When there is little
prospect of further work on a property being carried out by the Company, the remaining deferred costs
associated with that property are charged to operations during the period such determination is made.
The Company has no capitalized exploration and evaluation assets at this time.

9
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Restoration, rehabilitation and environmental obligations
The Company recognizes liabilities for statutory, contractual, constructive or legal obligations, including
those associated with the decommissioning of exploration and evaluation assets and equipment, when
those obligations result from the acquisition, construction, development or normal operation of the assets.
Initially, a decommissioning liability is recognized at its fair value in the period in which it is incurred if a
reasonable estimate of cost can be made. The Company records the present value of estimated future
cash flows associated with decommissioning as a liability when the liability is incurred and increases the
carrying value of the related assets for that amount.
Subsequently, these capitalized decommissioning liabilities are amortized over the life of the related
assets. As the end of each period, the liability is increased to reflect the passage of time and changes in
the estimated future cash flows underlying any initial estimates.
The Company recognizes its environmental liability on a site-by-site basis when it can be reliably
estimated. Environmental expenditures related to existing conditions resulting from past or current
operations and from which no current or future benefit is discernible are charged to the profit or loss
statements. The Company had no decommissioning liabilities for the years presented.

Impairment
The carrying amounts of the Company’s non-financial assets, other than deferred tax assets if any, 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.
For the purpose of impairment testing, assets that cannot be tested individually 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 groups of assets (the “cash-generating unit” or “CGU”). 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.
If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined
for the CGU to which the corporate asset belongs.
An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated
recoverable amount. Impairment losses are recognized in profit or loss.
Impairment losses recognized in prior periods are assessed at each reporting date for any indications that
the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in
the estimates used to determine the recoverable amount. 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 amortization, if no impairment loss had been recognized. A reversal of an
impairment loss is recognized immediately in profit or loss.

Provisions
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation. Provisions are determined by discounting the expected future cash flows
at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific
to the liability. The unwinding of the discount is recognized as a finance cost.

10
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Pension and other post-employment benefits
In 2003, the Company began recognizing a provision for Indonesian employee service entitlements in
accordance with Indonesia’s Labor Law No. 13/2003 dated March 25, 2003 (the “Law”) under an
assumption that all employees resigned at the reporting date.

For defined benefit pension plans, termination benefits, and other post-retirement benefits, the net periodic
pension expense is actuarially determined on an annual basis by independent actuaries using the
projected unit credit method. The determination of benefit expense requires assumptions such as the
discount rate to measure obligations the projected age of employees upon retirement, and the expected
rate of future compensation. For the purposes of calculating the expected return on plan assets, if any, the
plan assets are valued at fair value. Actual results will differ from results that are estimated based on
assumptions. All past service costs arising from plan amendments are recognized immediately in income
or expense when the amendment occurs or when the related restructuring costs are recognized, if earlier.

The asset or liability recognized in the statement of financial position is the present value of the benefit
obligation at the statement of financial position date less the fair value of the plan assets, if any, together
with adjustments for asset ceiling impairment or additional liabilities due to onerous minimum funding
requirement under IFRIC 19, The Limit on a Defined Benefit Asset. The present value of the benefit
obligation is determined by discounting the estimated future cash outflows using rates and outflow patterns
as determined by the actuary based on the Indonesian Labour Law parameters.

Actuarial gains and losses are recognized through other comprehensive income and are not re-classified to
the income statement. The movement in the provision for employee service entitlements is included in the
salary portion of exploration costs.

Financial instruments – classification and fair value

(i) Financial assets at fair value through profit or loss (“FVTPL”)
Financial assets at FVTPL are financial assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the short term or if so designated by
management. Derivatives are also categorized as FVTPL unless they are designed as effective hedges.
Financial assets at FVTPL are initially recognized, and subsequently carried, at fair value with changes
recognized in profit or loss. Attributable transaction costs are recognized in profit or loss when incurred.
Assets in this category include cash and restricted cash.

(ii) Loans and receivable

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for those with maturities greater
than 12 months or those that are expected to be settled after 12 months from the end of the reporting
period, which are classified as non-current assets. Assets in this category include government deposits
and trade and other receivables.
Loans and receivables are initially recognized at fair value plus any directly attributable transaction costs
and subsequently carried at amortized cost using the effective interest method, except for short-term
receivables when the recognition of interest would be immaterial.
The effective interest method is used to determine the amortized cost of loans and receivables and to
allocate interest income over the corresponding period. The effective interest rate is the rate that discounts
estimated future cash receipts over the expected life of the financial asset, or, where appropriate, a shorter
period.

11
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments – classification and fair value (continued)
(iii) Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each reporting
period end. Financial assets are impaired when there is objective evidence that, as a result of one or more
events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the
investment have been impacted.

Objective evidence of impairment could include the following:

• Significant financial difficulty of the issuer or counterparty;
• Default or delinquency in interest or principal payments; or
• It has become probable that the borrower will enter bankruptcy or financial reorganization

For financial assets carried at amortized cost, the amount of the impairment is the difference between the
asset’s carrying amount and the present value of the estimated future cash flows, discounted at the
financial asset’s original effective interest rate.

The carrying amount of all financial assets, excluding trade and other receivables, is directly reduced by
the impairment loss. The carrying amount of a trade or other receivable is reduced through the use of an
allowance account. When a trade or other receivable is considered uncollectible, it is written off against
the allowance account. Subsequent recoveries of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the allowance account are recognized in profit or
loss.
For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment
loss decreases and the decrease can be related objectively to an event occurring after the impairment
losses were recognized, the previously recognized impairment loss is reversed through profit or loss to the
extent that the carrying amount of the asset at the date the impairment is reversed does not exceed what
the amortized cost would have been had the impairment not been recognized.

(iv) De-recognition of financial assets

Financial assets are de-recognized when the rights to receive cash flows from the assets expire or the
financial assets are transferred and the Company has transferred substantially all of the risks and rewards
of ownership of the financial assets. On de-recognition of a financial asset, the difference between the
asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain
or loss that had been recognized directly in equity is recognized in profit or loss.

Financial liabilities and equity – classification and fair value

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangement. An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the group
entities are recorded at the proceeds received, net of direct issue costs.

Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.

12
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial liabilities and equity – classification and fair value (continued)

Financial liabilities may be classified as FVTPL upon initial recognition if:

• Such designation eliminates or significantly reduces a measurement or recognition inconsistency that

would otherwise arise; or

• The financial liability forms part of a group of financial assets or financial liabilities or both, which is
managed and its performance is evaluated on fair value basis, in accordance with the Company’s
documented risk management or investment strategy, and information about the grouping is provided
internally on that basis; or

• It forms part of a contract containing one or more embedded derivatives and IAS 39 permits the entire
combined contract (asset or liability) to be designated as a FVTPL.

At the end of each reporting period subsequent to initial recognition, financial liabilities at FVTPL are
measured at fair value, with changes in fair value recognized directly in operations in the period in which
they arise. Other financial liabilities are initially measured at fair value, net of transaction costs, and are
subsequently measured at amortized cost using the effective interest method, with interest expense
recognized on an effective yield basis. The Company has classified trade and other payables as other
financial liabilities.

Employee future benefits

The cost of defined benefit pension plans and employee termination benefits under the Law and the
present value of the pension obligation are determined using actuarial valuations. An actuarial valuation
involves making various assumptions that may differ from actual developments in the future (Note 11).
Actuarial gains and losses are recognized through other comprehensive income and not re-classified to the
income statement. The provision for employee service entitlements is included in the salary portion of
exploration expense.

The Company has classified provision for employee service entitlements as other financial liabilities.

Share capital
Common shares are classified as share capital. Incremental costs directly attributable to the issue of
common shares are recognized as a deduction from equity.

Loss per share

The Company presents basic and diluted earnings (loss) per share (“EPS”) data for its common shares.
Basic EPS is calculated by dividing the profit or loss attributable to common shareholders of the Company
by the weighted average number of common shares outstanding during the period, adjusted for own
shares held. Diluted earnings per share is calculated by dividing the earnings (loss) by the weighted
average number of common shares outstanding assuming that the proceeds to be received on the exercise
of dilutive share options and warrants are used to repurchase common shares at the average market price
during the period.

In the Company’s case, diluted earnings per share is the same as basic loss per share, as the effect of
outstanding share options and share purchase warrants on loss per share would be anti-dilutive.

13
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Share-based payment transactions
The stock option plan allows Company employees to acquire shares of the Company. The fair value of
options granted is recognized as a share-based compensation expense with a corresponding increase in
equity. An individual is classified as an employee when the individual is an employee for legal or tax
purposes (direct employee) or provides services similar to those performed by a direct employee.
Consideration paid on the exercise of stock options is credited to share capital and the fair value of the
options is reclassified from reserves to share capital.
The fair value is measured at grant date and each tranche is recognized over the period during which the
options vest. The fair value of the options granted is measured using the Black-Scholes option pricing
model taking into account the terms and conditions upon which the options were granted. At each financial
position reporting date, the amount recognized as an expense is adjusted to reflect the number of stock
options that are expected to vest.
Share-based payment arrangements in which the Company receives goods or services as consideration
for its own equity instruments are accounted for as equity-settled share-based payment transactions.
Accumulated other comprehensive income
Accumulated other comprehensive income consists of net income and other comprehensive income
(“OCI”). The Company’s financial statements include a Statement of Profit and Loss and Comprehensive
Profit and Loss, which includes the components of comprehensive income.

For the Company, OCI is comprised of unrealized gains or losses on available for sale financial assets,
and foreign currency translation differences for foreign operations, if any, both of which are presented
within the shareholders’ equity section of the statement of financial position.
Income taxes
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in
operations except to the extent that they relate to a business combination, or items recognized directly in
equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax
rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect
of previous years.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purpose. Deferred tax is not
recognized for the following temporary differences: the initial recognition of assets or liabilities in a
transaction that is not a business combination and that affects neither accounting nor taxable operations,
and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is
probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for
taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the
tax rates that are expected to be applied to temporary differences when they reverse, based on the laws
that have been enacted or substantially enacted by the reporting date. Deferred tax assets and liabilities
are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to
income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but
they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be
realized simultaneously.
A deferred tax asset is recognized 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 utilized.
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 realized.

14
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

Related party transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other
party or exercise significant influence over the other party in making financial and operating decisions.
Related parties may be individuals or corporate entities. A transaction is considered to be a related party
transaction when there is a transfer of resources or obligations between related parties.

New standards, interpretations and amendments adopted effective January 1, 2013

A number of new standards, amendments to standards and interpretations were adopted effective January
1, 2013. The adoption of these revised standards, either prospectively or retrospectively, as the case may
be, did not result in any changes to the financial statements of the Company as at January 1, 2012, or
December 31, 2012.
Amendments to IAS 1 Presentation of Financial Statements
This amendment requires that companies preparing financial statements under IFRS need to group
items within OCI that may be reclassified to the profit or loss. The amendments also reaffirmed
existing requirements that items in OCI and profit or loss should be presented as either a single
statement or two consecutive statements.
Amendments to IAS 27 and IAS 28 Separate Financial Statements and Investments in Associates and
Joint Ventures
These amendments address the accounting for subsidiaries, jointly controlled entities and associates
in non-consolidated financial statements. IAS 28 has been amended to include joint ventures in its
scope and to address the changes in IFRS 10 – 13.
Amendments to IAS 19 Employee Benefits
This amended standard introduced various changes in accounting and disclosure requirements for
defined benefit plans. The amended standard also finalizes proposals on accounting for termination
benefits; under the amended standard the termination benefits are recognized at the earlier of when
the entity recognizes costs for a restructuring within the scope of IAS 37, “Provisions, Contingent
Liabilities and Contingent Assets”, that includes the payment of a termination benefit, and when the
entity can no longer withdraw the offer of the termination benefit.
New standard IFRS 10 Consolidated Financial Statements
This standard provides for a new single consolidation model that identifies control as the basis for
consolidation for all types of entities, and replaces IAS 27 Consolidated and Separate Financial
Statements and SIC-12 Consolidation – Special Purpose Entities.
New standard IFRS 11 Joint Arrangements
This standard improves the accounting for joint arrangements by introducing a principle-based
approach that requires a party to a joint arrangement to recognize its rights and obligations arising
from the arrangement. Such a principle-based approach provides users with greater clarity about an
entity’s involvement in its joint arrangements by increasing the verifiability, comparability and
understandability of the reporting of these arrangements. IFRS 11 supersedes IAS 31 Interests in
Joint Ventures and SIC-13 Jointly Controlled Entities-Non-Monetary Contributions by Venturers.
New standard IFRS 12 Disclosure of Interests in Other Entities
This standard combines, enhances and replaces the disclosure requirements for subsidiaries, joint
arrangements, associates and unconsolidated structured entities.

15
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

New standards, interpretations and amendments adopted effective January 1, 2013 (continued)

New standard IFRS 13 Fair Value Measurement

This standard defines fair value and sets out a framework for measuring fair value and disclosures
about fair value measurements. It applies when other IFRSs require or permit fair value
measurements. It does not introduce any new requirements to measure an asset or a liability at fair
value, change what is measured at fair value in IFRSs or address how to present changes in fair
value.

New standards, interpretations and amendments not yet effective

A number of new standards, amendments to standards and interpretations are not yet effective as of
December 31, 2013, and have not been applied in preparing these consolidated financial statements.

a) Effective for annual periods beginning on or after January 1, 2014

Amendments to IAS 32 Financial Instruments: Presentation
The amendments to the disclosure requirements in IFRS 7 Financial Instruments: Disclosure require
information about all recognised financial instruments that are set off in accordance with paragraph
42 of IAS 32. The amendments also require disclosure of information about recognised financial
instruments subject to enforceable master netting arrangements and similar agreements even if they
are not set off under IAS 32.
The amendments to IAS 32 are not effective until annual periods beginning on or after 1 January
2014. However, the new offsetting disclosure requirements are effective sooner - for annual periods
beginning on or after 1 January 2013, and interim periods within those annual periods. The
amendments need to be provided retrospectively to all comparative periods.

b) Effective for annual periods not yet announced

New standard IFRS 9 Financial Instruments
Partial replacement of IAS 39 Financial Instruments: Recognition and Measurement. This
standard simplifies the current measurement model for financial instruments under IFRS and
establishes two measurement categories for financial assets: amortized cost, and fair value.
The existing IAS 39 categories of loans and receivables, held to maturity investments, and
available for sale financial assets will be eliminated.

The Company has not early adopted these revised standards and is currently assessing the
impact that these standards could have on future financial statements, although none of these
are expected to have a material effect on the financial statements of the Company.

16
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

4. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Categories of Financial Assets and Financial Liabilities

Financial instruments are classified into one of the following categories: FVTPL; held-to-maturity
investments; loans and receivables; available-for-sale; or other liabilities. The carrying values of the
Company’s financial instruments are classified into the following categories:

December 31, December 31,

Financial Instrument Category
2013 2012
Cash FVTPL $ 973,464 $ 3,058,382
Loans and
Government deposit 36,110 48,415
Receivables
Loans and
Trade and other receivables 268,460 1,886,595
Receivables
Trade and other payables Other liabilities 706,658 4,128,664
The Company’s financial instruments recorded at fair value require disclosure about how the fair value was
determined based on significant levels of inputs described in the following hierarchy:
Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the
reporting date. Active markets are those in which transactions occur in sufficient
frequency and value to provide pricing information on an ongoing basis.
Level 2 - Pricing inputs are other than quoted prices in active markets included in Level 1. Prices in
Level 2 are either directly or indirectly observable as of the reporting date. Level 2
valuations are based on inputs including quoted forward prices for commodities, time value
and volatility factors, which can be substantially observed or corroborated in the market
place.
Level 3 - Valuations in this level are those with inputs for the asset or liability that are not based on
observable market data.
The recorded amounts for cash are Level 1 in the fair value categories.

Risk management
The Company’s risk exposures and the impact on the Company’s financial instruments are summarized as
follows:

Credit Risk
Credit risk is the risk of potential loss to the Company if a counterparty to a financial instrument fails to
meet its contractual obligations. The Company’s credit risk is primarily attributable to its liquid financial
assets, including cash, receivables, and balances receivable from the government. The Company limits
the exposure to credit risk in its cash by only investing its cash with high-credit quality financial institutions
in business and savings accounts, guaranteed investment certificates and in government treasury bills
which are available on demand by the Company for its programs.

Liquidity Risk
Liquidity risk is the risk that the Company will not have the resources to meet its obligations as they fall
due. The Company manages this risk by closely monitoring cash forecasts and managing resources to
ensure that it will have sufficient liquidity to meet its obligations. All of the Company’s current financial
liabilities are anticipated to mature within the next sixty days.

17
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

4. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

Market Risk
Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign
exchange rates, and commodity and equity prices. These fluctuations may be significant.
a) Interest Rate Risk: The Company is exposed to interest rate risk to the extent that its cash balances
bear variable rates of interest. The interest rate risks on cash and short-term investments (GIC’s) and
on the Company’s obligations are not considered significant.
b) Foreign Currency risk: The Company is exposed to the financial risk related to the fluctuation of
foreign exchange rates against the Company’s functional currency, which is the United States (“US”)
dollar. A portion of the Company’s cash is held in Canadian (CDN”) dollars and the Company expects
to continue to raise funds in Europe, Canada, and Australasia. The Company conducts its business in
Indonesia in Indonesian Rupia (“Rp”) with a significant portion of expenditures in that country
denominated in US dollars and, in addition, a portion of the Company’s business is conducted in CDN,
GBP and the Australia (“AUS”) dollar. As such, it is subject to risk due to fluctuations in the exchange
rates between the US dollar and each of the Rp, GBP and CDN and AUS dollars. A significant change
in the currency exchange rates between the US dollars relative to foreign currencies could have an
effect on the Company’s results of operations, financial position or cash flows. The Company has not
hedged its exposure to currency fluctuations.
The Company’s exposure to the foreign currency amount in US dollars on financial instruments is as
follows:
As at December 31, 2013 As at December 31, 2012
Foreign currency Amount in US Foreign currency Amount in US
Currency Currency
amount dollars amount dollars
Cash CDN 48,535 45,633 CDN 74,400 74,779
Rp 192,452,121 15,789 - 791,444,654 82,049
Government
Rp 440,139,447 36,110 Rp 440,139,447 48,415
deposits
Trade and other CDN (966) (908) CDN (363) (365)
payables GBP (4,313) (7,375) GBP (4,407) (7,109)
AUD - - AUD (2,888) (3,000)
Rp (668,310,681) (54,829) Rp (1,776,262,670) (184,145)
34,420 10,624

Based upon the above net exposures and assuming that all other variables remain constant, a 10%
depreciation of the US dollar against the GBP and CDN and AUS dollars would result in a decrease in
the loss of approximately $3,440 in the year ended December 31, 2013, ($1,060 in the year ended
December 31, 2012). This sensitivity analysis includes only outstanding foreign currency denominated
monetary items.
c) Commodity price risk - While the value of the Company’s core mineral resource properties, the KSK
Contract of Work (the “KSK CoW”) and the Jelai Izin Usaha Pertambangan (“IUP”), are related to the
price of copper and gold and the outlook for these minerals, the Company currently does not have any
operating mines and hence does not have any hedging or other commodity based risks in respect of its
operational activities.
Historically, gold and copper prices have fluctuated significantly, and are affected by numerous factors
outside of the Company’s control, including but not limited to: industrial and retail demand; central
bank lending; forward sales by producers and speculators; levels of worldwide production; short-term
changes in supply and demand because of speculative hedging activities; and other factors related
specifically to gold.

18
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

4. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

Political Uncertainty
In conducting operations in Indonesia, the Company is subject to considerations and risks not typically
associated with companies operating in North America. These include risks such as the political, economic
and legal environments. Among other things, the Company's results may be adversely affected by
changes in the political and social conditions in Indonesia, and by changes in governmental policies with
respect to mining laws and regulations, anti-inflationary measures, currency conversion and remittance
abroad, and rates and methods of taxation.

5. CASH

As at December As at December
31, 2013 31, 2012
Canadian dollar denominated cash held in Canada $ 45,633 $ 74,779
US dollar denominated cash held in Canada 451,604 517,202
US dollar and Rupiah cash held in Indonesia 112,664 419,680
609,901 1,011,661
US dollar cash held in Canada and Indonesia exclusively
for use on joint venture projects 363,563 2,046,721
Cash $ 973,464 $ 3,058,382

Cash consists of cash and demand deposits with an original term to maturity of 90-days or less.

6. GOVERNMENT DEPOSIT

As at December As at December
31, 2013 31, 2012
Deposits paid to file tax appeals $ 48,415 $ 48,415
Foreign exchange movement on deposit (12,305) -
Current deposits paid to file tax appeals $ 36,110 $ 48,415

During fiscal 2012, the Company paid deposits of $36,110 (2012: $48,415) (Rupiah (“Rp”) 440,139,447) to
have tax appeals heard for the 2009 tax year. See Note 15.

19
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

7. TRADE AND OTHER RECEIVABLES

As at December As at December
31, 2013 31, 2012
Amounts receivable – employee advances $ 11,524 $ 35,489
Amounts receivable – other receivables 36,724 125,161
Amounts receivable – prepayments 4,554 15,614
52,802 176,264
Amounts receivable – due from JV partners 171,765 1,638,306
Amounts receivable – JV partner prepayments 43,893 72,025
Total $ 268,460 $ 1,886,595

8. EQUIPMENT

The following is a reconciliation of the carrying amounts of equipment, all located in Indonesia.

Balance as Balance as
of December 31, Additions Recoveries of December 31,
2011 2012
At cost:
Equipment $ 422,716 $ 166,763 $ (145,504) $ 443,975

Accumulated depreciation:
Equipment 410,530 $ 9,330 $ - 419,860

Net book value $ 12,186 $ 24,115

Balance as Recoveries Balance as

Write-off fully Sale of
of December 31, Additions and proceeds of December 31,
depreciated assets
2012 on sale 2013
At cost:
Equipment $ 443,975 $ 398,403 $ (133,899) $ (2,562) $ (100,288) $ 605,629

Accumulated depreciation:
Equipment 419,860 $ 77,266 $ (133,899) $ (2,562) $ - 360,665

Net book value $ 24,115 $ 244,964

20
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

9. EXPLORATION AND EVALUATION ASSETS and EXPENDITURES

The Company’s exploration and evaluation assets comprise the KSK Contract of Work (the “KSK CoW”)
porphyry copper prospect in Central Kalimantan and an Izin Usaha Pertambangan (“IUP”) for the Jelai gold
project in East Kalimantan.

KSK CoW – Central Kalimantan

The holder of the KSK CoW is KSK. The Company owns 100% of Indokal. KSK is owned 75% by Indokal
and 25% by PCK. Indokal owns 100% of PCK.
The KSK CoW was granted April 28, 1997 between the Republic of Indonesia and KSK as a 6th generation
CoW. The terms of the KSK CoW defines several periods under which work done on the KSK CoW will
fall. The KSK CoW is now confirmed as being in the 5th year of the Exploration Period until April 28, 2014.
The Company has applied under Article 23 of the KSK CoW for a 6th year extension of the Exploration
Period. This request has been accepted by the Ministry of Mines and the formal extension letter is in
process. The period following Exploration is the Feasibility Study Period which runs for not less than two
years, is extendable, and provides time to complete studies and identify the mining area.
A portion of the KSK CoW is within a Hutan Lindung (protected / reserved forest) area. The KSK CoW was
granted prior to the enactment of the 1999 Government of Indonesia Law No. 41 on Forestry which
prohibits open pit mining in Hutan Lindung areas. A subsequent Presidential Decree has confirmed that
when the Company’s property meets the necessary criteria it may apply for a permit to exploit that portion
of the properties within the KSK CoW that fall within the Hutan Lindung, either by underground mining or by
applying to change the forestry permit. On March 12, 2012 (as amended April 8, 2013), KSK received a 2-
year forestry permit granting permission to explore certain areas of the KSK COW. On December 2, 2013,
the Company applied for a 2-year renewal of the forestry permit for a total area of 7,688ha of which
170.25ha falls within the Hutan Lindung. This 7,688ha area covers all of the main prospect areas within
the KSK CoW. This renewal has been processed and is expected to be issued shortly.
On April 18, 2011, as amended on May 31, 2012, the Company entered into a joint venture agreement (the
“KSK Agreement”) with Surya Kencana LLC (“SK LLC”), a wholly-owned subsidiary of Freeport-McMoRan
Exploration Corporation (“Freeport”) in relation to the KSK CoW. Notice was received from SK LLC on
December 30, 2013, of their withdrawal from the KSK Agreement effective January 31, 2014. SK LLC has
therefore forfeited its right to the shares of Indokal. However, SK LLC will retain the right to a royalty of 1%
over the property, capped to a maximum of the total expenditures of approximately US$35 million made by
SK LLC on the project.
Pursuant to the Agreement, KSK was the operator of the exploration program, and the Company earned a
3%-5% management fee as operator on all expenditures incurred on the KSK CoW pursuant to the KSK
Agreement. During the year ended December 31, 2013, the Company earned management fees of
$611,980 (2012 - $575,697).

Jelai Project – East Kalimantan

On March 23, 2006, the Company organized JCM. The Company entered into certain contractual
arrangements with JCM and its nominee shareholders, pursuant to which the Company (either by itself or
through a wholly owned mining services company) agreed to provide all necessary financial, technical and
managerial requirements for the development and operation of a mine within the JCM project area, and in
return, JCM agreed to pay to the Company (or its subsidiary) the net proceeds of the sale of minerals from
the JCM project area.
In the 2012 financial year, this indirect arrangement had been largely unwound, so that a wholly-owned
subsidiary of the Company, KLG SING, now holds 99.3% of the shares of JCM. The remaining 0.7%
continues to be held by the same nominee shareholders until such time as the Indonesian authorities
approve the final transfer of the remaining shares so that KLG SING will ultimately own 99.9% and the
Company will hold the remaining 0.1% of the shares of JCM.

21
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

9. EXPLORATION AND EVALUATION ASSETS (continued)

Jelai Project – East Kalimantan (continued)

JCM paid an Indonesian Rupiah denominated refundable security deposit of $24,100 to the government
that gave JCM the right to conduct exploration, including drilling, over an approximate 5,000 hectare area,
comprising the Jelai project. Those rights were subsequently converted to an IUP which gives the holder
the right to explore for metallic minerals, including gold, within the IUP Area, and to conduct feasibility
studies into the development of a mining operation until June 2, 2015.
The Indonesian Ministry of Forestry granted JCM an extension to its Borrow and Use Exploration Forestry
Permit (IPPKH). The permit, which is renewable, extends the authorization for the Company to conduct
exploration activities until December 16, 2015. It covers all the existing permitted areas, namely the Mewet
and ten of the other 12 Jelai IUP prospects, comprising 4,675 hectares of the 5,000 hectare IUP.
From February 16, 2011 until it was terminated effective September 30, 2012, the Company was party to
an option agreement (the “Deed”) with Tigers Realm Minerals Pty Ltd. which was subsequently assigned to
Tigers Realm Metals Pty Ltd. (“Tigers”).
Pursuant to the Deed, the Company earned a management fee of $14,000 per month from Tigers. During
the year ended December 31, 2013, the Company earned management fees of $nil (2012 - $128,294)
pursuant to the Deed.
The details of exploration expenditures expensed during the years ended December 31, 2013, and 2012
are as follows:
For the year ended
December 31, December 31,
2013 2012

KSK CoW
Exploration costs during the year
Community development $ 720,279 $ 532,098
Consultants and contractors 3,794,349 1,981,790
Contracted drilling 2,394,927 1,914,349
Equipment rental recoveries (320,392) (174,877)
Field support 2,110,133 1,722,394
Land tax and dead rent 19,015 16,304
Salaries, wages and related costs 2,546,983 1,773,970
Sample preparation and analysis 801,375 414,191
Supplies and equipment 903,418 1,090,010
Taxation 1,006,944 888,228
Transport (including helicopters) 3,440,947 3,567,725
Travel and accommodation 305,730 235,379
17,723,708 13,961,561
Depreciation 70,835 2,834
Current year exploration 17,794,543 13,964,395
Recovery from funding partner (17,973,627) (14,066,925)
Current year net exploration (179,084) (102,530)

<table continues on next page>

22
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

9. EXPLORATION AND EVALUATION ASSETS (continued)

For the year ended

December 31, December 31,
2013 2012

Jelai
Exploration costs during the year
Community development $ - $ 42,986
Consultants and contractors 126,776 178,545
Contracted drilling - 496,201
Field support 21,351 103,065
Land tax and dead rent - 1,641
Salaries, wages and related costs 60,019 591,689
Sample preparation and analysis - 41,811
Supplies and equipment - 287,745
Taxation 28,223 114,070
Travel and accommodation 25,532 77,451
261,901 1,935,204
Depreciation 6,431 6,496
Current year exploration 268,332 1,941,700
Recovery from funding partner - (1,850,405)
Current year net exploration 268,332 91,295

Total current year exploration 89,248 (11,235)

Cumulative exploration expenditures
included in the deficit, beginning of the year 20,325,903 20,337,138
Cumulative exploration expenditures
$ 20,415,151 $ 20,325,903
included in the deficit, end of the year

10. TRADE AND OTHER PAYABLES

As at December As at December
Falling due within the next twelve months 31, 2013 31, 2012
Trade and other payables $ 160,872 $ 378,947
(1)
Trade and other payables owed to related parties 11,456 49,944
172,328 428,891
Trade and other payables in Indonesia to be paid with cash
held for use on joint venture projects 534,330 3,699,773
Total $ 706,658 $ 4,128,664

(1) Related parties include officers and directors of the Company.

23
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

11. PROVISION FOR EMPLOYEE SERVICE ENTITLEMENTS

The Company provides benefits for its Indonesian employees, excluding any expatriate employees who
may reside and work in Indonesia, who have reached the normal retirement age of 55. The benefits are
unfunded and are based on the Company’s Collective Labour Agreement that has been aligned with the
provisions of Indonesian Labour Law No 13/2003 dated March 25, 2003 (the “Laws”) as follows:
a) two times the severance amounts specified by Article 156(2) of the Law); plus
b) the service amounts specified by Article 156(3) of the Law; plus
c) 15% of the total severance and service payments.

The following table summarizes the components of net employee service entitlements expense recognized
in exploration and evaluation expenses and amounts recognized in the statement of financial position for
employee service entitlements liability. For the year ended December 31, 2013, the actual termination
liability and expense was used, as all of the Indonesian employees were terminated in January 2014, and
the actual liability was known. For the year ended December 31, 2012, the expense and liability was
determined by an independent actuary.

Movements in the employee service entitlements liability during the years ended December 31, 2013, and
2012, are as follows:

Balance, December 31, 2011 $ 99,198

Less: utilization during the year -
Add: provision during the year - pre-funded by Freeport 57,559
provision during the year - KSK responsibility 7,570
Add: foreign exchange adjustment to estimated provision (23)

Balance, December 31, 2012 164,304

Less: utilization during the period (48,806)
Add: provision during the year - pre-funded by Freeport 77,231
provision during the year - KSK responsibility 7,450
foreign exchange adjustment to estimated provision (22,120)
Balance, December 31, 2013 $ 178,059

The principal actuarial assumptions used in determining the provision for employee service entitlements as
of December 31, 2012, are as follows:

a) Actuarial Valuation Method is Project Unit Credit Method

b) Discount rate: 5.75% per annum
c) Salary increase: 10% per annum
d) Mortality rate: USA Table of Mortality, Commissioners Standard Ordinary 1980 (CSO’80)
e) Retirement age: 55 years of age (all employees are assumed to retire at their retirement age)
f) Resignation rate: 5% at 25 years of age and linearly decreasing to 1% at age 45 and thereafter
g) Disability rate: 10% of mortality rate
h) Tax benefit: 15% of total post-employment benefits

24
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

12. SHARE CAPITAL AND RESERVES

a) Authorized share capital

At December 31, 2013, and December 31, 2012, the authorized share capital comprised $5,000,000
divided into 500,000,000 common shares at a par value of $0.01 each. All issued shares are fully
paid. At December 31, 2013, the issued share capital comprised 171,407,156 common shares
(December 31, 2012 – 171,407,156).

b) Issued share capital

A summary of changes in share capital and reserves is contained in the Consolidated Statement of
Changes in Equity, for the years ended December 31, 2013, and 2012.

Fiscal 2013
There were no changes to the issued and outstanding share capital of the Company during the year
ended December 31, 2013.

Fiscal 2012
On May 10, 2012, the Company issued 6,000,000 common shares pursuant to a private placement for
gross proceeds of $480,000. The Company incurred share issue costs of $6,770.

c) Stock Options
The Company has a shareholder approved “rolling” stock option plan (the “Plan”). Under the Plan the
maximum number of shares reserved for issuance may not exceed 10% of the total number of issued
and outstanding common shares at the time of granting. The exercise price of each stock option shall
not be less than the market price of the Company’s stock at the date of grant. Options can have a
maximum term of ten years and typically terminate 90 days following the termination of the optionee’s
employment or engagement, except in the case of retirement or death. Vesting of options is at the
discretion of the Board of Directors at the time the options are granted.
The continuity of stock options for the year ended December 31, 2013, is as follows:

Exercise Balance, Balance,

price December 31, Granted Exercised Expired December 31,
Expiry date Cdn $ 2012 2013
January 23, 2013 $ 0.20 50,000 - - (50,000) -
April 1, 2013 $ 0.20 50,000 - - (50,000) -
July 25, 2013 $ 0.11 1,220,000 - - (1,220,000) -
April 21, 2016 $ 0.11 4,875,000 - - - 4,875,000
June 17, 2016 $ 0.12 200,000 - - - 200,000
July 4, 2016 $ 0.07 200,000 - - - 200,000
July 1, 2018 $ 0.10 - 5,950,000 - - 5,950,000
6,595,000 5,950,000 - (1,320,000) 11,225,000
Weighted average
exercise price Cdn$ $ 0.11 $ 0.10 $ - $ 0.12 $ 0.10
The weighted average remaining contractual life of the options outstanding as at December 31, 2013,
was 3.48 years. All of the outstanding options are exercisable at December 31, 2013.

25
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

12. SHARE CAPITAL AND RESERVES (continued)

c) Stock Options (continued)

The continuity of stock options for the year ended December 31, 2012, is as follows:
Exercise Balance, Balance,
price December 31, Granted Exercised Expired December 31,
Expiry date Cdn $ 2011 2012
April 25, 2012 $ 0.35 1,360,000 - - (1,360,000) -
January 23, 2013 $ 0.20 50,000 - - - 50,000
April 1, 2013 $ 0.20 50,000 - - - 50,000
July 25, 2013 $ 0.11 1,370,000 - - (150,000) 1,220,000
April 21, 2016 $ 0.11 4,875,000 - - - 4,875,000
June 17, 2016 $ 0.12 200,000 - - - 200,000
July 4, 2016 $ 0.07 200,000 - - - 200,000
8,105,000 - - (1,510,000) 6,595,000
Weighted average
exercise price Cdn$ $ 0.15 $ - $ - $ 0.33 $ 0.11

d) Share-based Compensation
Fiscal 2013:
During the year ended December 31, 2013, the Company recorded $236,633 in non-cash share-based
compensation expense for options vesting in the period.

On July 1, 2013, the Company granted 5,950,000 stock options with a total grant-date fair value of
$236,633 or $0.04 per option. Share-based compensation for the vesting portion of the stock options
was $236,633 which was recognized in operations. The fair value of these options was determined
using a risk free interest rate of 1.62%, an expected volatility of 176%, an expected life of 5 years, an
expected dividend of zero, and a foreign exchange rate of 0.9497 to the Canadian dollar. Volatility was
determined using daily closing share prices over a term equivalent to the expected life of the options.

Fiscal 2012:
During the year ended December 31, 2012, the Company recorded $51,015 in non-cash share-based
compensation expense for options vesting in the period.
On April 21, 2011, the Company granted 4,875,000 stock options with a total grant-date fair value of
$589,785 or $0.121 per option. Share-based compensation for the vesting portion of the stock options
was $538,770 which was recognized in operations, while the balance will be recognized as the options
continue to vest through the end of 2012. The fair value of these options was determined using a risk
free interest rate of 2.38%, an expected volatility of 181%, an expected life of 5 years, an expected
dividend of zero, and a foreign exchange rate of 0.9519 to the Canadian dollar. Volatility was
determined using daily closing share prices over a term equivalent to the expected life of the options.

26
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

13. RELATED PARTY TRANSACTIONS

a) The Company’s related parties consist of companies owned by executive officers and directors as
follows:
Name Nature of transactions
Golden Oak Corporate Services Limited (“Golden Oak”) Financial reporting and corporate
compliance services
Pollard Geological Services PTY Ltd. (“Pollard”) Non-executive Chairman and technical
advisor
Romfal Corporate Pty Ltd. (“Romfal”) Chief Executive Officer (“CEO”)

The Company incurred the following fees in the normal course of operations in connection with
companies owned by key management and directors.

December 31, December 31,

2013 2012
Consulting fees – Golden Oak (Corporate
Secretary’s company) $ 101,993 $ 117,902
Consulting fees – Romfal (CEO’s company) 120,000 70,000

Total $ 221.993 $ 187,902

b) Compensation of key management personnel:

The remuneration of directors and other members of key management personnel, including amounts
disclosed in Note 13(a), during the year ended December 31, 2013, and 2012 were as follows:

December 31, December 31,

2013 2012
Consulting fees $ 221,993 $ 187,902
Salaries, wages and related costs (exploration and
evaluation expenditures) 248,572 248,572
(1)
Directors fees to non-management directors 47,000 24,000
Share-based compensation 117,323 51,015
Total $ 634,888 $ 511,489

(1) the December 31, 2013 figures Include $8,000 paid to Francis De Sousa for his eight-month tenure as a
Director from August 2012 to March 2013.

14. COMMITMENTS

The AIM Rules require the Company to have a Nominated Adviser (“Nomad”) and Broker at all times.

RFC Group Limited (“RFC”) is the Company’s Nomad for the purpose of the AIM Rules. During the year
ended December 31, 2013, the Company paid or accrued $57,470 (AUD$55,000) in consulting fees to
RFC. In 2012, the Company paid or accrued $64,653 (AUD$60,000) in consulting fees to RFC. The
Company expects to incur costs in fiscal 2014 of AUD$40,000 to retain RFC.

VSA Capital (“VSA”) is the Company’s Broker for the purpose of the AIM Rules. During the year ended
December 31, 2013, the Company paid or accrued a total of $24,331 (£15,000) as consulting fees to our
AIM Broker. The Company expects to incur costs in fiscal 2014 of £15,000 to retain VSA.

27
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

15. CONTINGENCIES

During 2011, the Indonesian tax authorities conducted an audit of JCM for the 2009 tax year. The majority
of the review focused on the deductibility of expenditures in Indonesia and adjusted the tax loss carry
forwards. The most material outcome from the audit related to the tax authorities deeming that the
intercompany loans made by the Company to JCM should have had interest accrued at the rate of 8% per
annum with withholding tax of 20%, therefore becoming payable to the Indonesian government. The
Company believes the tax assessment is without basis. To have the appeal heard by the tax court, the
Company was required to pay a deposit of Rp 440,139,447, an amount equal to the 2009 tax exposure as
calculated by the tax authorities. The outcome of the tax appeal process and any tax assessments due
and payable arising from that process is not determinable at this time.

16. SEGMENT DISCLOSURES

IFRS 8 “Operating Segments” requires operating segments to be identified on the basis of internal reports
that are regularly reviewed by the chief operating decision-maker to allocate resources to the segments
and to assess their performance.
The chief operating decision-maker who is responsible for allocating resources and assessing performance
of the operating segments, has been defined as the CEO.
The Company operates in a single segment, being mineral exploration and development.
With the exception of the cash disclosed in Note 5, all of the Company’s significant assets are held in
Indonesia.

17. MANAGEMENT OF CAPITAL

The Company manages common shares and stock options as capital (see Note 12). The Company’s
objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in
order to pursue the development of its mineral properties and to maintain a flexible capital structure which
optimizes the costs of capital at an acceptable risk. The Company does not have any externally imposed
capital requirements to which it is subject.

The Company manages the capital structure and makes adjustments to it in light of changes in economic
conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure,
the Company may attempt to issue new shares, issue debt, acquire or dispose of assets or adjust the
amount of cash.

In order to facilitate the management of its capital requirements, the Company prepares expenditure
budgets that are updated as necessary depending on various factors, including successful capital
deployment and general industry conditions.

In order to maximize ongoing exploration efforts, the Company does not pay out dividends. The Company’s
investment policy is to keep its cash treasury on deposit in an interest bearing Canadian chartered bank
account. Cash consists of cash on hand, balances with banks and investments in highly liquid instruments.
The Company considers all highly liquid instruments with maturity of three months or less at the time of
issuance to be cash and the fair value approximates the carrying value.

28
Kalimantan Gold Corporation Limited
Notes to the Consolidated Financial Statements
December 31, 2013 and 2012
(expressed in United States dollars, unless otherwise noted)

18. INCOME TAX

The Company is a tax exempt Bermuda corporation and is a reporting issuer to certain Canadian securities
commissions and its shares are listed for trading on the TSX-V.
Profits generated by mining under the Company’s sixth generation KSK COW and IUP’s are taxed in
Indonesia at the maximum corporate rate of 30%.
In Indonesia, tax losses may be carried forward for a period of eight years. The Company defers its
mineral exploration costs in Indonesia for tax purposes. The Company has non-capital losses in Indonesia
of approximately $1,295,000 for income tax purposes which may be carried forward and offset against
future taxable income. These losses expire through to 2021. These tax losses have not been recognized
in the financial statements as it is not probable that they will be utilized in the near future.
The following table reconciles the amount of income tax recoverable on application of the statutory
Indonesian income tax rates:
2013 2012

Income tax recovery $ - $ -

Effect of difference in tax rates between
parent company and subsidiary 5,418,863 4,771,829
5,418,863 4,771,829
Unrecognized benefit of deferred tax assets (5,418,863) (4,771,829)
Total $ - $ -

As the Company has a history of losses, deferred tax assets have not been recognized on the following
deductable temporary differences:

2013 2012
Temporary differences
Mineral exploration properties and
exploration and evaluation assets $ 51,335,349 $ 33,272,474
Non-capital losses carry forwards 1,295,379 1,206,131
Equipment 244,964 24,115
Total unrecognized deductable temporary
$ 52,875,692 $ 34,502,720
differences

19. SUBSEQUENT EVENT

See Note 9 for a discussion regarding Freeport’s withdrawal from the KSK project subsequent to
December 31, 2013.

20. RECLASSIFICATIONS

Certain amounts in the prior years’ financial statements have been reclassified to conform to the current
period presentation.

29