TIDMCICR
RNS Number : 7941U
CIC Mining Resources Ltd
30 December 2011
FOR IMMEDIATE RELEASE: 30 December 2011:
CIC Mining Resources Ltd
("CIC Mining Resources", the "Company", or "CICR")
INTERIM FINANCIAL STATEMENTS
CICR is pleased to announce its third quarter report for the
period ended 31 October 2011.
Financial highlights:
-- Revenue C$1,181k (2010: C$266k) for the nine months ended 31
Oct 2011
-- Net Profit of C$333k (2010: Loss of C$694k) for the nine
months ended 31 Oct 2011
The Company has been working on a number of advisory mandates
and the Company expects to see the final quarter positive.
Nature of Business
The Company is a consulting and advisory company, operating
primarily in the mining and energy infrastructure sectors. The
Company seeks to provide consulting and advisory services to
entities operating at various stages of resource development, and
the exclusive right to control the public listing process of any
client company if the client company is an unlisted company.
Mining and energy infrastructure companies or projects will
include those involved in the exploration for, and extraction of,
base metals, precious metals, bulk commodities, thermal and
metallurgical coals, industrial metals, hydrocarbons, renewables
and new technologies, including single-asset as well as diversified
natural resources companies.
The core services provided by CIC Mining Resources Ltd. are: the
Advisory Service which provides a range of technical, project
management, strategic and commercial services; the Strategic
Investment Service which helps companies source investment from
industry partners for which the Company will typically receive an
equity interest; and Advice on Listings where the Company helps the
client realize value by listing on a Stock Exchange.
FINANCIAL RESULTS
Summary of Quarterly Results
The following table sets out selected un-audited quarterly
financial information of the Company and is derived from the
un-audited quarterly financial statements prepared by
management.
Oct 31, July April Jan 31, Oct 31, July April Jan 31,
31, 30, 31, 30,
2011 2011 2011 2011 2010 2010 2010 2010
----------------- -------- -------- -------- ------------ ---------- ---------- ---------- ------------
Revenues
Net profit
(loss) 431,213 530,065 220,000 446,878 - - - -
----------------- ======== ======== ========
62,983 135,355 134,391 (2,347,175) (319,661) (131,589) (242,676) (2,939,149)
----------------- -------- -------- -------- ------------ ---------- ---------- ---------- ------------
Basic & diluted
loss per share 0.00 (0.00) (0.00) (0.02) 0.00 (0.00) (0.00) (0.02)
----------------- -------- -------- -------- ------------ ---------- ---------- ---------- ------------
Variances in net income and loss by quarter in 2011 and 2010
reflect overall corporate activity and factors, which do not recur
each quarter, such as the fluctuating of foreign exchange rate and
revenues.
During the quarter ended October 31, 2011:
The net profit for the quarter was $62,983, versus a net loss of
$(319,661) for the same quarter last year and for the three
quarters was $333k, versus a net loss of $(694k) for the same
period last year. The Company generated cash revenues in this
quarter and confirms the Company's business model is producing
initial positive results. This is expected to continue in the next
quarter.
Changes in the quarter:
Amortization expense of $2,305 versus $2,809 in the same quarter
last year remains relatively the same.
Management fee was Nil in this quarter versus $75,000 in the
same quarter last year. In Q3 year ended January 31, 2012
management fees were halted pending new agreement with Stuart J
Bromley.
Office and miscellaneousexpenses was $77,705 in this quarter
versus $170,364 in the same quarter last year. Last year was an
accounting adjustment and the Office and miscellaneous expenses
remains at constant levels.
Professional fees were $120,320 in this quarter versus 183,870
in the same quarter last year. The Company has significant advisory
services work in progress. Professional fees are expected to
increase in 2012.
Rental was $105,813 in this quarter versus $44,900 in the same
quarter last year. New office lease and construction costs are
reflected in the increase.
Salaries were $31,646 in this quarter versus $69,951 in the same
quarter last year. Contract staff contracts ended resulting overall
salary costs.
Stock option compensation was Nil in this quarter versus Nil in
the same quarter last year.
Travel & promotion, meal was $25,883 in this quarter versus
2,800 in the same quarter last year and remains relatively the
same.
The Company's financial instruments as of October 31, 2011
consisted of cash, amounts receivable, accounts payable and accrual
liabilities. As at October 31, 2011, the Company's cash totaled
$29,106 compared to $2,421 as at October 31, 2010. The Company has
a working capital deficiency of $2,638,698 as of October 31, 2011
compared to a working capital deficiency $1,635,731 as of October
31, 2010. As of October 31, 2011, the Company had 14,150,000
options exercisable, which if exercised, the Company's available
cash would increase by $990,500.
SHARE DATA
CIC Mining Resources Ltd. authorized capital consists of an
unlimited number of common shares without par value and an
unlimited number of preferred shares without par value. As at
October 31, 2011, the Company has 152,451,777 common shares issued
and outstanding, 14,150,000 stock options and 350,000 warrants
outstanding.
The following is the summary of outstanding shares, stock
options and warrants:
October 31, October 31,
2011 2010
--------------- ------------ ------------
Common shares 152,451,777 144,807,492
Warrants 350,000 34,762,170
Options 14,150,000 5,175,000
--------------- ------------ ------------
OTHER POSSIBLE IMPACTS
The Company is monitoring new regulations, policies and laws
that change the way it operates commercially in China. In
particular, the transfer of money from China to Canada is very
difficult under the current Company organization.
The Company operates two companies in China:
a) China CIC Mining Resources Ltd. Beijing Company which is a foreign enterprise
b) Top Ten Mining Investment Limited, a domestic Chinese enterprise.
The Company has established its head office in China and in
future intends to operate as a Chinese company that is listed on
overseas stock exchange. Foreign enterprise restrictions will not
apply.
Management's responsibility for financial reporting
The accompanying interim financial statements of The Company
were prepared by management in accordance with International
Financial Reporting Standards ("IFRS"). Management acknowledges
responsibility for the preparation and presentation of the interim
financial statements, including responsibility for significant
accounting judgments and estimates and the choice of accounting
principles and methods that are appropriate to the Company's
circumstances. The significant accounting policies of the Company
are summarized in Note 2 to the interim financial statements.
Management has established systems of internal control over the
financial reporting process, which are designed to provide
reasonable assurance that relevant and reliable financial
information is produced.
The Board of Directors is responsible for reviewing and
approving the consolidated financial statements and for ensuring
that management fulfills its financial reporting responsibilities.
An Audit Committee assists the Board of Directors in fulfilling
this responsibility. The majority members of the Audit Committee
are not officers of the Company. The Audit Committee meets with
management as well as with the independent auditors to review the
internal controls over the financial reporting process, the
consolidated financial statements and the auditors' report. The
Audit Committee also reviews the Annual Report to ensure that the
financial information reported therein is consistent with the
information presented in the financial statements. The Audit
Committee reports its findings to the Board of Directors for its
consideration in approving the consolidated financial statements
for issuance to the shareholders.
Management recognizes its responsibility for conducting the
Company's affairs in compliance with established financial
standards, and applicable laws and regulations, and for maintaining
proper standards of conduct for its activities.
These interim statements will be available on the Company's
website, www.cicresources.com, from today.
Stuart J. Bromley
Chairman
Hongguang Li
Director
December 30, 2011
OR FURTHER INFORMATION PLEASE CONTACT:
CIC Mining Resources
Ltd Stuart Bromley, CEO +86 136 0113 1912
Northland Capital Partners Luke Cairns/Tim Metcalfe/Rod
Limited (Nominated Adviser) Venables +44 (0) 20 7796 8800
GTH Communications (Public Toby Hall/Suzanne Johnson
Relations) Walsh +44 (0) 20 3103 3903
CIC MINING RESOURCES LTD.
INTERIM CONSOLIDATED STATEMENTS OF BALANCE SHEETS
(In Canadian Dollars)
(Unaudited - Prepared by Management)
January 31,
October 31,
2011 2011
(Unaudited) (Audited)
ASSETS
Current Assets
Cash $ 29,106 $ 4,851
Amounts receivable 258,892 31,722
Marketable securities 2,652 2,652
Prepaid expenses and deposits 91,795 56,652
---------------------------------------- --- ------------------ --- ----------------
382,445 95,877
Property and equipment 2,343 9,246
----------------------------------------- --- ------------------ --- ----------------
$ 384,788 $ 105,123
-------------------------------------------- ------------------ --- ----------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued
liabilities $ 1,864,903 $ 2,077,707
Income taxes payable 98,440 98,440
Due to related parties 1,057,800 907,800
---------------------------------------- --- ------------------ --- ----------------
3,021,143 3,083,947
Shareholder's Equity (Note 7)
Share capital 24,592,434 24,592,434
Contributed surplus 4,646,153 4,646,153
---------------------------------------- --- ------------------ --- ----------------
29,238,587 29,238,587
Deficit ( 32,243,281) (32,576,010)
Accumulated other comprehensive
income 368,339 358,599
---------------------------------------- --- ------------------ --- ----------------
(31,874,942) (32,217,411)
(2,636,355) (2,978,824)
$ 384,788 $ 105,123
-------------------------------------------- ------------------ --- ----------------
Nature of Operations and Going
Concern - Note 1
Commitments - Note 8
Contingencies - Note 9
APPROVED ON BEHALF OF THE BOARD:
"Hongguang Li " Director
-----------------------------------------
"Stuart J. Bromley" Director
-----------------------------------------
See Accompanying Notes to the Interim Financial
Statements
CIC MINING RESOURCES LTD.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
(In Canadian Dollars)
(Unaudited - Prepared by Management)
Three months ended Nine months ended
October 31 October 31
------------------------------------- ---------------------------------- --------------------------
2011 2010 2011 2010
------------------------------------- -------------------- ------------ ------------ ------------
Revenue 431,213 266,030 1,181,278 266,030
General and administrative costs
Amortization 2,305 2,809 6,916 7,411
Bank charges and interest 1,260 2,372 8,508 2,587
Consulting fees - 25,000 (23,293) 28,000
Filing fees and transfer agent 3,298 8,665 15,650 11,665
Director insurance - - - -
Management fees (Note 6) - 75,000 150,000 225,000
Meals and entertainment - - - 2,626
Office and administration 77,705 170,364 222,772 191,157
Professional fees 120,320 183,870 60,715 183,870
Rent 105,813 44,900 273,918 120,317
Salaries 31,646 69,951 92,188 184,565
Stock based compensation - - - -
Travel and promotion 25,883 2,800 41,175 2,800
------------------------------------- -------------------- ------------ ------------ ------------
Total general and administrative
costs 368,231 585,731 848,549 959,998
Net Income (Loss) before other
items 62,983 (319,701) 332,729 (693,968)
------------------------------------- -------------------- ------------ ------------ ------------
Other income (expense)
Gain (loss) on sale of marketable
securities
Impairment of intangible assets - - - -
Impairment of resources properties
Interest Income - 40 - 41
------------------------------------ -------------------- ------------ ------------ ------------
Net Income (Loss) before income
taxes 62,983 (319,661) 332,729 (693,927)
Income tax
------------------------------------ -------------------- ------------ ------------ ------------
Net Income (loss) for the period 62,983 (319,661) 332,729 (693,927)
OCI-Foreign exchange
Other comprehensive income (loss) 4,990 (11,969) (9,740) 80,698
------------------------------------- -------------------- ------------ ------------ ------------
Comprehensive income (loss) 67,973 (331,630) 322,989 (613,299)
------------------------------------- -------------------- ------------ ------------ ------------
Basic and fully diluted net income
(loss) per share 0.00 0.00 0.00 0.00
Weighted average number of shares
outstanding 152,451,777 144,807,492 152,451,777 144,807,492
------------------------------------- -------------------- ------------ ------------ ------------
See Accompanying Notes to the interim financial
statements.
CIC MINING RESOURCES LTD.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Canadian Dollars)
(Unaudited - Prepared by Management)
Three months ended Nine months ended
October 31 October 31
----------------------- ----------------------------------------------- --------------------------------------------
2011 2010 2011 2010
----------------------- ----------------------- ---------------------- -------------------- ----------------------
Operating Activities
Net Income (loss) 62,983 (319,661) 332,729 (693,927)
Items not effecting
cash:
Amortization 2,305 2,809 6,916 7,411
Stock options - - - -
issued to
consultants
Stock based - - - -
compensation
Write down of - - - -
resource
properties
65,288 (316,852) 339,645 (686,516)
Changes in non-cash
working
capital items:
Amounts receivable (124,553) - (227,170) -
Prepaid expenses - (18,946) (35,143) 57,371
Accounts payable
and accrued
liabilities 77,505 (309,881) (212,804) (137,240)
----------------------- ----------------------- ---------------------- -------------------- ----------------------
Cash used in operating
activities 18,240 (645,679) (135,472) (766,385)
Financing Activities
Sale of marketable - - - -
securities
Increase (decrease)
due to
related parties - 600,524 150,000 714,599
Short term loans - - - -
payable
----------------------- ----------------------- ---------------------- -------------------- ----------------------
Cash provided by
financing
activities - 600,524 150,000 714,599
Investing Activity
Resource property - - - -
expenditures
Intangible assets - - - -
----------------------- ----------------------- ---------------------- -------------------- ----------------------
Cash provided by - - - -
investing
activities
Effects of exchange
rate change
in cash (4,992) (12,473) 9,727 8,927
Increase (decrease) in
cash
and cash equivalents
during
the period 13,248 (57,628) 24,255 (42,859)
Cash and cash
equivalents,
beginning of the
period 15,858 60,049 4,851 45,280
Cash and cash
equivalents
(overdraft) at end
the period 29,106 2,421 29,106 2,421
----------------------- ----------------------- ---------------------- -------------------- ----------------------
Supplemental
disclosure of
cash flow
information:
Cash paid for:
Interest $ - $ - $ - $ -
Income taxes $ - $ - $ - $ -
CIC MINING RESOURCES LTD.
INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(In Canadian Dollars)
(Unaudited - Prepared by Management)
Accumulated
Number Amount Contributed Accumulated Other Comprehensive
of shares ($) Surplus($) Deficit($) Loss($)
------------------------------ ------------ ----------- ------------ -------------- ----------------------
Balance, January 31, 2010 144,807,492 27,491,066 1,457,391 (30,228,835) 269,438
-------------------------------- ------------ ----------- ------------ -------------- ----------------------
Balance, January 31, 2011 152,451,777 24,592,434 4,646,153 (32,576,010) 358,599
Issued for cash
Pursuant of private - - - - -
placement
Share subscription - - - - -
receivable
Top up of January 31, - - - - -
2010 private placement
Cancellation of shares - - - - -
in escrow
Stock based compensation - - - - -
Net loss for the year - - - 332,729 -
Foreign exchange translation - - - - 9,740
Reversal of unrealized - - - - -
gain on securities disposal
Unrealized gain on available - - - - -
for sale securities
------------------------------- -------------- ----------------------
Balance, October 31, 2011 152,451,777 24,592,434 4,646,153 (32,243,281) 368,339
-------------------------------- ------------ ----------- ------------ -------------- ----------------------
See Accompanying Notes to the Interim Financial Statements
1. NATURE of operations AND GOING CONCERN
CIC Mining Resources Ltd. (the "Company") is a public company
incorporated on June 20, 2003 under the Canada Business
Corporations Act listed on the Canadian National Stock Exchange
(CNSX) and is a consulting and advisory company, operating
preliminary in the mining and energy infrastructure sectors. Its
strategy is to assist in finding pre-IPO funding for its client
companies and to assist them in identifying suitable potential
investors and/or strategic partners for their projects. In November
2010, the Company's primary listing moved to the AIM market of the
London Stock Exchange. The Company also trades on the Frankfurt
Stock Exchange. The Company subsequently de-listed its shares from
trading on the CNSX as of June 24, 2011.
These unaudited interim consolidated financial statements have
been prepared in accordance with Canadian generally accepted
accounting principles applicable to a going concern, which assumes
that the Company will be able to meet its obligations and continue
its operations for its next fiscal year. Realized values may be
substantially different from carrying values shown and these
financial statements do not give effect to adjustments that would
be necessary to the carrying values and classification of assets
and liabilities should the Company be unable to continue as a going
concern. These interim statements should be read together with the
audited financial statements and the accompanying notes included in
the Company's latest annual report. In the opinion of the Company,
its unaudited interim consolidated financial statements contain all
adjustments necessary in order to present a fair statement of the
results of the interim presented.
At October 31, 2011, the Company has accumulated deficit of
$32,243,281 since its inception, and working capital deficit
excluding marketing securities of $2,638,698 and expects to incur
further losses in the development of its business, all of which
casts substantial doubt about the Company's ability to continue as
a going concern. The Company's ability to continue as a going
concern is dependent upon its ability to generate future profitable
operations and/or to obtain the necessary financing to meet its
obligations and repay its liabilities arising from normal business
operations when they come due.
2. Significant Accounting Policies
Presentation and Consolidation
These consolidated financial statements have been presented in
Canadian dollars and include the accounts of the Company and its
wholly-owned subsidiaries, China CIC Mining Resources Limited
Beijing Representative Office ("CICMR"), and Top Ten Mining
Investment Limited ("Top Ten"). Prior to the January 31, 2008
fiscal year, these two subsidiaries were considered inactive and
all transactions related to the Company's PRC operations were
recorded directly by CIC Mining Resources Ltd. in its own accounts.
Effective February 1, 2008 the Company used these subsidiaries to
conduct the majority of its operations in PRC and they became
active. Accordingly, the assets, obligations and operations of
these subsidiaries were consolidated with those of the Company from
that date forward. All significant inter-company transactions and
balances have been eliminated upon consolidation.
Use of Estimates
The preparation of financial statements in conformity with
Canadian generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates and could impact future results of operations and cash
flows.
Marketable Securities
Marketable securities include shares of a public company
received as part of service revenue. These shares have been
categorized as available for sale financial instruments and as such
are carried at fair value. Adjustments to fair value are recorded
in other comprehensive income unless there is a loss in value that
is other than temporary, in which case the adjustment to fair value
is included in income and not reversed for future fair value
changes.
Foreign Currency Translation
The Company's functional currency is the Canadian dollar. The
functional currency of the Company's wholly-owned subsidiaries,
CICMR and Top Ten is the PRC Renminbi ("RMB"). On February 1, 2008
the Company changed its foreign currency translation policy from
the temporal to the current rate translation method because the
primary business focus of the company had changed and there were
significant changes to the facts and circumstances primarily
affecting the Company's foreign exchange exposure. Prior to
February 1, 2008 the Company considered itself to be an exploration
stage resource company focused on acquiring and exploring mineral
properties in PRC, and was considered to be dependent on financing
from outside PRC to sustain its exploration activities.
Effective February 1, 2008, the Company changed its primary
focus to being a consultant and facilitator for the negotiation,
development, promotion and financing of PRC resource projects in
exchange for fees. As a result, the majority of the Company's
activities are not only carried out in PRC but it also receives
consideration from its PRC clients in the form of cash, equity
participation, royalty participation, or other rights, and it is no
longer dependent on its Canadian operation for financial backing.
In addition, the majority of the Company's costs of operations are
primarily local PRC costs and the majority of its consulting
services are performed in PRC. Accordingly, management considers
these PRC operations to be self-sustaining foreign operations and
accordingly, the financial statements of CICMR and Top Ten are
translated into Canadian dollars using the current rate method, as
follows:
i) Assets and liabilities, at the rate of exchange in effect as
at the balance sheet date;
ii) Revenues and expenses items (including amortization), at the
rate of exchange in effect on the dates on which such items are
recognized in income during the period.
Exchange gains and losses arising from the translation of the
financial statements are recognized in a separate component of
other comprehensive income.
Revenue Recognition
The Company earns its revenue by using its expertise to perform
consulting, advisory, and facilitation services to development and
exploration stage resource companies and projects in PRC.
Consideration received by the Company may include cash, shares,
securities or options of other companies, royalty participation or
other rights, or options to acquire properties, rights or
projects.
Service revenue is generally recognized when persuasive evidence
of an arrangement exists, the value is fixed or determinable,
performance has occurred and there is reasonable assurance of
collection.
The Company's policy for recognizing revenues is as follows:
i) Cash consideration is recognized once the service has been
performed, the consideration has been earned, the cash has either
been received or there is reasonable assurance of prompt
collection, any obligation to return or refund the consideration
has lapsed or been waived, and a formal arrangement between the
parties exists.
ii) Shares or options received as consideration are recognized
when the services have been performed or the agreed effort has been
expended, pursuant to a contract or agreement, the securities have
been received by the Company, and the value of the securities
received is measurable with reasonable accuracy.
iii) Royalty participation or other rights are recognized only
once it is established that a royalty has been received or a right
has been realized, generally when the right is sold or otherwise
liquidated, a contract or arrangement exists, and the consideration
received is measurable.
iv) Options to acquire properties or projects received as
consideration are recognized once the option is sold or once the
option has been exercised and the resulting assets obtained are
liquidated or otherwise disposed.
Stock-based Compensation
The Company has a stock option plan, which is described in Note
7. The Company recognizes stock-based compensation expense in
accordance with CICA Handbook Section 3870, "Stock-Based
Compensation and Other Stock-Based Payments". When stock or stock
options are issued to employees, compensation expense is recognized
based on the fair value of the stock or stock options issued on the
date of grant, over the vesting period of the stock or stock
options. Stock-based payments to non-employees are measured at the
fair value of the consideration received, or the fair value of the
equity instruments issued, or liabilities incurred, whichever is
more reliably measurable. The fair value of stock-based payments to
non-employees is periodically re-measured until counterparty
performance is complete, and any change therein is recognized over
the period and in the same manner as if the Company had paid cash
instead of paying with or using equity instruments. The cost of
stock-based payments to non-employees that are fully vested and
non-forfeitable at the grant date is measured and recognized at
that date. On the exercise of stock options, share capital is
credited for consideration received and for fair value amounts
previously credited to contributed surplus.
Property and Equipment
Property and equipment are recorded at cost. Amortization is
provided using the straight-line method to write off the cost over
the estimated useful lives of the assets as follows:
Office, furniture and computer equipment 5 Years
The Company reviews the carrying values of its property and
equipment for impairment whenever events or changes in
circumstances indicate their carrying values may exceed their
estimated net recoverable amounts determined by reference to
estimated future operating results and undiscounted net cash flows.
An impairment loss is recognized when the carrying value of those
assets exceeds their fair value.
Comprehensive Income
This standard requires the presentation of a statement of
comprehensive income and its components. Comprehensive income
includes both net earnings and other comprehensive income. Other
comprehensive income includes holding gains and losses on available
for sale investments, gains and losses on certain derivative
financial instruments and foreign currency gains and losses
relating to self-sustaining foreign operations.
Future Income Taxes
Future income taxes are recorded using the asset and liability
method whereby future tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Future tax assets and
liabilities are measured using the enacted or substantively enacted
tax rates expected to apply when the asset is realized or the
liability settled. The effect on future tax assets and liabilities
of a change in tax rates is recognized in income in the period that
substantive enactment or enactment occurs. To the extent that the
Company does not consider it more likely than not that a future tax
asset will be recovered, it provides a valuation allowance against
the excess.
Basic and Diluted Loss Per Share
Basic loss per share is computed by dividing the loss for the
year by the weighted average number of common shares outstanding
during the year. Diluted loss per share reflects the potential
dilution that could occur if potentially dilutive securities were
exercised or converted to common shares. The dilutive effect of
options and warrants and their equivalent is computed by
application of the treasury stock method. Common equivalent shares
consisting of shares issuable on the exercise of common share
purchase options and warrants were not included in the computation
of diluted loss per share because the effect was
anti--dilutive.
Recent Accounting Pronouncements
In October 2009, the Accounting Standards Board issued a third
and final IFRS Omnibus Exposure Draft confirming that publicly
accountable enterprises will be required to apply IFRS, in full and
without modifications, for all financial periods beginning January
1, 2011. The Company's adoption of IFRS on February 1, 2011
requires the restatement, for comparative purposes, of amounts
reported by the Company for the year ended January 31, 2011,
including the opening balance sheet as at February 1, 2010.
3. CAPITAL MANAGEMENT
The Company's objectives for the management of capital are to
safeguard the Company's ability to continue as a going concern
including the preservation of capital and to achieve reasonable
returns on invested cash after satisfying the objective of
preserving capital.
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. The Company considers its
cash to be its manageable capital. The Company's policy is to
maintain sufficient cash to cover operating costs over a reasonable
future period. There are no external restrictions on management of
capital.
4. financial instruments and CREDIT RISK
Fair Value of Financial Instruments
The Company's financial instruments consist of cash, marketable
securities, amounts receivable, accounts payable, and amounts due
to related parties. The carrying value of these instruments
approximates their fair values due to the relatively short periods
of maturity of these instruments.
Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist of cash and amounts
receivable. To minimize its credit risk the Company deposits its
cash in bank accounts with financial institutions. Transaction
costs are expensed as incurred.
Financial assets past due
The Company reviews financial assets past due on an ongoing
basis with the objective of identifying potential matters which
could delay the collection of funds at an early stage. Once items
are identified as being past due, contact is made with the
respective company to determine the reason for the delay in payment
and to establish an agreement to rectify the breach of contractual
terms. At Oct 31, 2011, the Company had no provision for doubtful
accounts.
Liquidity Risk
The Company does not have sufficient cash to meet its short-term
general and administrative expenditures and its current
liabilities. All of the Company's financial liabilities have
contractual maturities of 30 days or are due on demand.
Market Risk
Market risk is the risk to the Company that the fair value or
future cash flows of financial instruments will fluctuate due to
changes in interest rates and foreign currency exchange rates.
Market risk arises as a result of the Company generating revenues
and incurring expenses in foreign currencies, holding cash and cash
equivalents which earn interest, and having operations based in
countries using currencies other than the Canadian dollar.
Interest Rate Risk
The Company does not currently have financial instruments that
expose the Company to interest rate risk.
Foreign Exchange Risk
The Company's financial instruments are substantially all
denominated in Chinese RMB and the Canadian dollar. Fluctuations in
the exchange rates between the RMB and Canadian dollar could have a
material effect on the Company's business and on the reported
amounts of various financial instruments. The Company does not
utilize any financial instruments or cash management policies to
mitigate the risks arising from changes in foreign currency
rates.
At October 31, 2011, approximately 57% of the Company's net
liabilities are denominated in Chinese RMB and are exposed to
foreign exchange risk.
5. PROPERTY AND EQUIPMENT
Office, Furniture & Equipment
2011 2010
------------------- ------------ ---------------- ----------- -----------
Cost Accumulated Net Book Net Book
amortization Value Value
------------------- ------------ ---------------- ----------- -----------
Office, furniture
& equipment $ 36,856 $ 34,513 $ 2,343 $ 11,562
------------------- --- ------- ---- ---------- --- ------ -------
6. Related Party Transactions
The Company incurred the following expenses with companies
related by way of officers in common and with a company with whom a
director is associated. These costs were measured at the amounts
agreed upon by the parties.
Nine months ended
October 31
2011 2010
------------------------------- ---------------------------- ----------------------------
Management fees 150,000 225,000
Professional fees - legal and - -
interest
------------------------------- ---------------------------- ----------------------------
$ 150,000 $ 225,000
------------------------------- ---------- ---------------- ---------- ----------------
These amounts are included in Due to related parties.
In Q3 year ended January 31, 2012 management fees were halted
pending new agreement with Stuart J Bromley.
These entities are owed by the Company as follows:
October 31, January 31, 2011
2011
------------------------ --- -------------------- ---------------------
Due to related parties 1,057,800 907,800
----------------------------- -------------------- ---------------------
$ 1,057,800 $ 907,800
---------------------------- -------------------- ---------------------
These amounts are non-interest bearing, unsecured and have no
fixed terms of repayment.
7. share capital
Authorized:
Unlimited common shares without par value.
Issued:
Number of Amount
shares
------------------------------------ ------------------------ ---------------------------
Balance, January 31, 2010 144,807,492 27,491,067
------------------------------------ ------------------------ ---------------------------
Balance, January 31, 2011 152,451,777 24,592,434
------------------------------------ ------------------------ ---------------------------
Issued for cash
Pursuant to private placement - -
Balance, October 31, 2011 152,451,777 $ 24,592,434
------------------------------------ ------------------------ ---- ---------------------
Escrow:
At October 31, 2011, no common shares were held in escrow
(January 31, 2011: Nil).
Warrants:
The following is the summary of the changes in the Company's
outstanding warrants at October 31, 2011 and January 31, 2011:
October 31, 2011 January 31, 2011
------------------------ ------------------------------- -------------------------------
Weighted Weighted
Shares Average Shares Average
Exercise Exercise
Price Price
------------------------ ---------------- ------------- ---------------- -------------
Balance of warrants at
beginning of period 35,112,170 $0.15 50,382,170 $0.18
Issued - - 350,000 0.10
======================== ================ ============= ================ =============
Exercised - - (2,000,000) 0.28
Expired (34,762,170) 0.15 (13,620,000) 0.25
------------------------ ---------------- ------------- ---------------- -------------
Balance of warrants at
end of period 350,000 $0.15 35,112,170 $0.15
------------------------ ---------------- ------------- ---------------- -------------
At October 31, 2011, the Company had 350,000 (January 31, 2011 -
35,112,170) warrants outstanding. Each warrant entitles the holder
thereof the right to purchase one common share for each warrant
held as follows:
October 31, January 31,
2011 2011
Expiry date Exercise price Number of Number of
Warrants Warrants
------------------ ---------------- ------------ ------------
February 4, 2010 $0.28 - -
February 4, 2010 $0.25 - -
July 13, 2011 $0.15 - 34,762,170
July 14, 2012 $0.10 350,000 350,000
------------------ ---------------- ------------ ------------
350,000 35,112,170
------------------ ---------------- ------------ ------------
Share Purchase Options
The Company has a stock option plan which authorizes the board
of directors to grant incentive stock options to directors,
officers and employees. The exercise price and vesting provisions
of the options are determined by the board based on the market
values of the shares using the closing price on the date prior to
date of the grant. The continuity of options outstanding is as
follows:
October 31, 2011 January 31, 2011
---------------------------- ------------------------ -----------------------
Weighted Weighted
Average Average
Stock Exercise Stock Exercise
Options Price Options Price
---------------------------- ------------ ---------- ----------- ----------
Balance, beginning of
period 5,175,000 $0.32 5,175,000 $0.32
Granted 10,600,000 0.05 10,600,000 0.05
Expired (1,625,000) 0.75
Balance, end of period 14,150,000 $0.07 15,775,000 $0.09
---------------------------- ------------ ---------- ----------- ----------
Exercisable, end of period 14,150,000 15,775,000
---------------------------- ------------ ---------- ----------- ----------
On November 14, 2010, the Company changed the exercise price for
2,700,000 previously vested stock options. The exercise price for
1,000,000 stock options was changed to $0.05 from $0.75, 750,000
stock options was changed to $0.05 from $0.11, and 950,000 stock
options was changed to $0.05 from $0.10.
On November 15, 2010, 9,900,000 stock options were granted to
directors for their services to the Company and 700,000 stock
options were granted to consultants for their legal and advisory
services.
All of these stock options vested immediately, expire on
November 15, 2013, and have an exercise price of $0.05 per
share.
As at October 31, 2011, there were 14,150,000employee, director
and consultant options outstanding. The weighted average remaining
life for outstanding options is 1.81 years, and weighted average
exercise price is $0.07.
Weighted average Options Options
Expiry date remaining life Exercise price Outstanding Exercisable
-------------- ----------------- ---------------- ------------- -------------
May 23, 2012 0.81 $0.68 100,000 100,000
October 17,
2012 1.22 $0.10 1,600,000 1,600,000
September
24, 2012 1.15 $0.10 150,000 150,000
February 7,
2013 1.53 $0.10 1,700,000 1,700,000
November 15,
2013 2.30 $0.05 10,600,000 10,600,000
-------------- ----------------- ---------------- ------------- -------------
1.81 $0.07 14,150,000 14,150,000
-------------- ----------------- ---------------- ------------- -------------
As of December 31, 2011, the fair value of the options granted
and the options repriced during the year was $285,130. The
assumptions used in the Black-Scholes model and the resulting grant
date fair value for the 10,600,000 options granted during the 2011
fiscal year are indicated below.
Risk-free interest rate 1.75%
Expected dividend yield 0%
Expected option life (years) 3.00
Expected stock price volatility 216%
Issue date fair value per option $0.025
As of December 31, 2011, the assumptions used in the
Black-Scholes model and resulting grant date fair value for the
2,700,000 options repriced during the 2011 fiscal year are
indicated below.
Risk-free interest rate 1.56%
Expected dividend yield 0%
Expected option life (years) 1.21
Expected stock price volatility 222%
Issue date fair value per option $0.02
8. Commitments
The Company entered into operating leases expiring in February
2014 for office premises and equipment located in China. Minimum
annual lease payments required are approximately as follows:
Year Ending January 31, 2012 $ 140,600
Year Ending January 31, 2013 140,600
Year Ending January 31, 2014 140,600
9. CONTINGENCIES
a) The Company and certain of its directors are defendants in an
action in the Supreme Court of British Columbia commenced on June
26, 2005 whereby various parties have sought various damages from
the Company and certain of its directors and a declaration that the
Company has no interest in the properties known as the Golden
Harvest property located in Li County, Long Nan District, Gansu
Province, PRC, also known as the 25 Zone Lease and No. 5 Lease
forming part of the Liba Project. The plaintiffs in this action
also applied for leave to pursue a derivative action in the Supreme
Court of British Columbia to cancel the 40,000,000 shares
originally subject to the escrow agreement. The 40,000,000 escrow
shares were cancelled before January 31, 2011.
The Company continues to incur costs to defend this action but
is unable to predict its outcome.
All costs associated with defending this action are expensed as
incurred and the Company has not recorded any accruals for damages
after those direct costs incurred to date.
10. SUBSEQUENT EVENTS
a) On June 24, 2011, the Company de-listed from the Canadian National Stock Exchange (CNSX).
b) The Company in November 2011 sold shares held in CIC Precious
Metals Group (HK) Limited (now Pubic Co.).
c) On December 20, 2011 the Company held its Annual General
Meeting whereby all motions were passed.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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