RNS Number:0397D
Moydow Mines International Inc
16 May 2006
First Quarter
Interim Report
Three Months Ended March 31, 2006
Toronto Office
Suite 1220, 20 Toronto Street
Toronto, Ontario M5C 2B8
Tel : (416) 703-3751
Fax : (416) 367-3638
E-mail : info@moydow.com
Dublin Office
74 Haddington Road
Dublin 4, Ireland
Tel : (353) 1-667-7611
Fax : (353) 1-667-7622
E-mail : www.moydow.com
Message to Shareholders
Dear Shareholder,
During the quarter under review your Company has concentrated its exploration
efforts on those projects which management believe will provide the greatest
value to you, the shareholder.
To this end, most of the work during the period has focused on bringing the Port
Loko project in Sierra Leone to feasibility and finding targets on the Dala
diamond project in Angola.
At Port Loko in Sierra Leone, where Moydow is earning a 60% interest in this
bauxite project, CAM llc of Denver was appointed to produce a feasibility study.
Moydow has recently received initial estimates of ore grade, tonnages, capital
and operating costs and at this stage it appears that the project will be
feasible. It is anticipated that the full feasibility will be completed shortly
with a view to bringing the project towards production.
At Dala, our diamond project in Angola, work has continued apace. Your Company
has now applied for the kimberlite licence for the area and has posted a US$1
million bond with Endiama for this purpose. This bond is repayable once Moydow
has incurred expenditures of US$1 million on the licence. Your Company has now
outlined several anomalies which we intend to drill in the next two months. Of
particular interest is a large (eight hectare) low gravity anomaly which is
coincident with a group of known diamond occurrences on the property. It is in
this area which we will concentrate our efforts.
We are continuing to work on our gold properties. Drilling at Okumpreko in
Ghana has now been completed and we are awaiting the collation of the final
results. Also in Ghana drilling is due to commence on the Hwidem project in the
next week. This prospective project lies on the Ahafo belt and is surrounded by
Newmont property.
Also, during the period under review, Moydow and Diamond Fields have continued
to work together towards a merger of the two companies in the near future. It
is currently anticipated that the transaction will be presented to the
shareholders of both companies within the next several weeks.
In the coming months a new Moydow will emerge with a renewed focus. With the
proposed transaction with Diamond Fields, we will join the club of diamond
producers and we will have some of the most prospective exploration projects in
Africa.
"Signed"
Brian Kiernan
President and CEO May 12, 2006
Management's Discussion and Analysis of Financial Condition
And Operating Results
General
This interim management discussion and analysis ("MD&A") is a review of Moydow's
financial and operating results for the first quarter ending March 31, 2006 and
is compared with those for the corresponding quarter of 2005. In order to
better understand the MD&A, it should be read in conjunction with the audited
consolidated financial statements of the Company and notes thereto for the year
ended December 31, 2005. The consolidated financial statements have been
prepared in accordance with Canadian generally accepted accounting principles.
The reporting currency for the Company is the United States dollar, and all
amounts in the following discussion are in United States dollars unless
otherwise noted. This discussion is based on information available to May 12,
2006.
Company Overview
Moydow Mines International Inc. ("Moydow" or the "Company") is an international
exploration company with primary interests in precious metals, diamonds and
industrial minerals. Exploration activities are focused principally in Africa.
Moydow Mines' common shares are listed on both the Toronto Stock Exchange and
the Alternative Investment Market ("AIM") of the London Stock Exchange (symbol "
MOY"). For further information on the Company, please visit our website at
www.moydow.com or view our public filings on the SEDAR website at www.sedar.com.
On March 1, 2006, the Company announced that it had reached an agreement with
Diamond Fields International Ltd. ("Diamond Fields") effective February 28,
2006; pursuant to which, Moydow common shareholders will exchange their Moydow
securities for securities of Diamond Fields (the "acquisition"). Diamond Fields
is engaged in mineral exploration and development worldwide.
As a condition to the acquisition, Moydow is required to complete a private
equity placement (the "placing") to raise net proceeds of at least $1.8 million.
Upon completion of the placing and the satisfaction of all conditions and
regulatory requirements, Moydow's shareholders will exchange all of their Moydow
common shares, including shares to be issued, as part of the placing for a total
of 75,412,208 Diamond Fields' shares, with warrants and options of Moydow being
exchanged for warrants and stock options of Diamond Fields in proportion to the
share exchange. Diamond Fields will acquire all the issued shares of Moydow and
the shares to be issued pursuant to the placing. Diamond Fields currently has
outstanding 113,118,312 common shares. Upon completion of the proposed
acquisition, Diamond Fields will have 188,530,520 common shares in issues of
which Moydow's shareholders (including the shareholders pursuant to the placing)
will own 40%.
The acquisition is subject to, among other things, receipt of all necessary
regulatory, court and stock exchange approvals, Moydow's shareholder approval, a
valuation and/or fairness opinion by each Company and lock-up agreements
executed by the Chairman and Chief Executive Officer of the Company under which
they have agreed to vote in favour of the merger and entry of the parties into a
definite agreement. In the event that the merger is not completed under certain
circumstances, the party who terminates the agreement will be required to pay to
the other a break fee of $0.25 million.
Subsidiaries and affiliated companies of Moydow are organized internationally so
that each has a specific geographic area or mineral project interest. Moydow
provides administrative, technical and financial assistance to these companies.
Forward-Looking Statements
This MD&A contains "forward-looking statements" that are subject to a number of
known and unknown risks, uncertainties and other factors that may cause actual
results to differ materially from those anticipated in our forward-looking
statements. Factors that could cause such differences include: changes in metal,
equity markets, results of exploration and related expenses, drilling activity,
sampling and other data, currency exchange rates, change in governments, ability
to raise finances and changes to regulations affecting the mining industry. Such
forward-looking statements involve known and unknown risks and uncertainties
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.
Disclosure Controls and Procedures
As at March 31, 2006, an evaluation was carried out under the supervision of and
with the participation of the Company's management, including the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
Company's disclosure controls and procedures. Based on that evaluation, the
Chief Executive Officer and the Chief Financial Officer concluded that the
design and operation of these disclosure controls and procedures were effective
as at March 31, 2006 to provide reasonable assurance that material information
relating to the Company and its consolidated subsidiaries would be made known to
them by others within those entities.
Critical Accounting Estimates
Moydow's accounting policies are described in note 2 to the Consolidated
Financial Statements for the year ended December 31, 2005. Set out below is a
discussion of the application of Moydow's critical accounting policies that
require the Company to make assumptions about matters that are uncertain at the
time the accounting estimate is made, and where different estimates that could
reasonably have been used in the current period, or changes in the accounting
estimate that reasonably likely to occur from period to period would have a
material impact on Moydow's financial statements.
Carrying value of mineral properties
Acquisition costs of mineral properties, together with direct exploration and
development expenses incurred thereon, are deferred and capitalized on a
property by property basis. Upon reaching commercial production, these
capitalized costs are transferred from exploration properties to producing
properties on the consolidated balance sheets and are amortized into operations
using the unit-of-production method over the estimated useful life of the
estimated related ore reserves.
In the event that the long-term expectation is that the net carrying amount of
these capitalized exploration costs will not be recovered, the carrying amount
is written down accordingly and the write-down amount charged to operations.
Such would be indicated where:
* Exploration activities have ceased;
* Exploration results are not promising such that exploration
will not be planned for the foreseeable future;
* Lease ownership rights expire; or
* Insufficient funding is available to complete the exploration
program.
The amount shown for mineral properties represents costs incurred to date net of
recoveries from option or joint venture participants and write-downs, and does
not necessarily reflect present or future values.
Overview of Exploration Activities, Contractual Obligations and Commitments
Dala project, Angola
The Company is party to two separate exploration projects with the same partners
on the Dala property in Angola, relating to the exploration for kimberlite and
alluvial diamonds.
Kimberlite diamonds
On December 16, 2005, the Company signed an agreement with Empressa Nacional De
Diamantes De Angola ("Endiama"), the Angolan state diamond mining company and
Cimader-Comercio Geral Limitada ("Cimader"), a local Angolan company, to explore
for kimberlite (primary) diamonds on the Dala concession, located near the town
of Saurimo, in north-east Angola. The concession comprises 3,000 square
kilometres. Under the terms of the agreement, the Company can earn a 40%
interest in the concession with the remaining percentages held by Endiama and
Cimader. The Company entered into a separate agreement with Concord Minerals
LLC ("Concord"), a private Nevada company, whereby Concord has the right to earn
up to 50% of Moydow's interest in the concession by funding exploration
expenditures under Moydow's agreement with Endiama and Cimader. To maintain
their interest, the Company and Concord will have to incur expenditures of not
less than $10 million on or before January 14, 2009. Cimader and Endiama have a
free carried interest in the project. If Moydow or Concord decide not to fund
their percentage interest, then the non-funding party will be diluted on a
straight-line percentage expressed as percentage of total expenditures.
Alluvial diamonds
On October 1, 2004, the Company signed an agreement with Endiama and Cimader to
explore for alluvial diamonds on the Dala concession. Under the terms of the
agreement, the Company and its strategic partner, Concord have a 23.3% and a
9.7% interest, respectively, in the concession with the remaining percentages
held by Endiama and Cimader. To maintain their interest, the Company and
Concord will have to incur expenditures of not less than $5 million on or before
October 1, 2007. Cimader and Endiama have a free carried interest in the
project. If Moydow or Concord decide not to fund their percentage interest,
then the non-funding party will be diluted on a straight-line percentage
expressed as percentage of total expenditures
The Company's cumulative expenditures to March 31, 2006 amounted to $2.23
million of which $0.46 million was incurred during the first quarter of 2006.
On January 14, 2006, pursuant to the agreement with Endiama, Moydow posted a $1
million bond with Endiama. In order for the bond to be refunded to Moydow, the
Company must incur expenditures of $1 million within six months of posting the
bond to avoid forfeiture of the cash. As of March 31, 2006, the Company has
spent $0.46 million on the kimberlite licence as partial satisfaction towards
this requirement to spend $1 million.
Port Loko property, Sierra Leone
In September 2004, the Company entered into an option agreement, with Gondwana
Investments Limited ("Gondwana"), a company incorporated in Luxembourg. The
agreement allows Moydow to acquire up to a 60% interest in the Port Loko bauxite
deposit by incurring exploration expenditure of $1 million and produce and
deliver a feasibility study on or before June 30, 2006. The agreement only
covers bauxite and no other minerals on the property.
Cumulative expenditures to March 31, 2006 mounted to $1.92 million of which
$0.28 million was incurred during the first quarter of 2006.
On October 24, 2005, the Company appointed Chlumsky Armbrust & Meyer ("CAM") to
prepare a Bankable Feasibility Study on the Port Loko Bauxite Deposit in Sierra
Leone, West Africa. CAM estimated the cost for the Bankable Feasibility Study
to be $0.15 million of which $0.086 million was incurred as at March 31, 2006.
Ntotoroso property, Ghana
On December 8, 2003, the Company sold its wholly owned subsidiary, Moydow
Limited (Isle of Man), which, following an internal restructuring, owned the
Company's 50% joint venture interest in the Ntotoroso gold property in Ghana but
no other mineral properties, to Newmont Mining Corporation ("Newmont").
In connection with the sale, the Company entered into a royalty agreement
whereby the Company acquired the right to a net smelter return royalty of 2% on
all recovered ounces of gold and silver produced from the Ntotoroso property
after the first 1.2 million gold equivalent ounces for a consideration for $0.25
million. No value has been ascribed to the royalty rights acquired by the
Company.
Hwidem property, Ghana
On October 3, 2005, the Company was granted a two-year extension to its
prospecting licence with respect to the Hwidem property, by the Minister for
Lands, Forestry and Mines in Ghana. The licence area covers 24.7 square
kilometres and it adjoins the Kenyase-Ntotoroso area currently under lease to
Rank Mining Company Limited, a subsidiary of Newmont.
The Company incurred exploration expenditures on this property of $0.03 million
during the first quarter of 2006. The minimum exploration expenditures required
to maintain the licence are $0.52 million of which $0.37 million had been spent
as at March 31, 2006. If gold mineralization does not exist in sufficient
quantities in the area to warrant completion of the work program, the Company is
not liable for any shortfall on the minimum exploration expenditures.
Okumpreko property, Ghana
During the first quarter of 2006, exploration work continued on the Okumpreko
gold property in Ghana where the Company carried out a 2,000 metre reverse
circulation drilling program. Results from this drilling program will be
provided on an on-going basis as they become available. The Company can earn a
40% interest in this gold project in return for direct expenditures of $0.25
million incurred within one year of entering into the agreement, which was
signed in September 2004. The Company can increase its interest to 51% by
incurring additional exploration expenditure of $0.25 million within two years
of signing the agreement. Management is currently negotiating an extension to
the terms of the agreement. Cumulative expenditures to March 31, 2006 amounted
to $0.37 million of which $0.13 million was incurred during the first quarter of
2006.
Commitments
The Company, either directly or through certain joint ventures, has obligations
to expend various amounts on its mineral properties and projects in order to
keep its mineral property rights in good standing. All agreements are in the
normal course of business.
Payments due ($ thousand) Total Less than 1 year 1 to 3 years
Exploration and development $15,918 $395 $15,523
Segmented Information
The Company has one reportable operating segment, being exploration of mineral
properties in geographic areas.
Results of Operations
Net earnings for the quarter ended March 31, 2006 was $0.03 million or $0.001
per share compared to a loss of $0.53 million in the same period in 2005 or
$0.018 per share.
During the first quarter of 2006, the Company sold 45,000 Newmont common shares
for proceeds of $2.53 million. The Company recognized a gain of $0.31 million
on the sale of these shares.
During the first quarter of 2005, the Company sold 50,000 Newmont common shares
for proceeds of $2.13 million. The Company recognized a loss of $0.09 million
on the sale of these shares. The Company also recorded a loss of $0.19 million
on the write-down of its remaining 90,000 Newmont common shares to their market
value on March 31, 2005.
General and administrative expenses were $0.25 million in the first quarter of
2006 as compared with $0.26 million in the same period of 2005.
The foreign exchange loss in the first quarter of 2006 was $0.01 million
compared to a gain of $0.01 million in the same period of 2005. The foreign
exchange gain resulted from the movements in exchange rates between operating
currencies and the United States dollar.
The Company earned dividend income of $0.001 million and $0.001 million during
the first quarter 2006 and 2005, respectively. The dividend income was received
from the Company's shareholding in Newmont.
The Company earned deposit interest income of $0.001 million and $0.001 million
during the first quarter of 2006 and 2005, respectively.
The Company's revenues are derived from: interest and dividend income, which is
dependent on available cash balances and prevailing interest rates and returns
on investments which are dependent on the prevailing market at the time of sale.
As at March 31, 2006, the Company recorded a provision for income taxes in the
sum of $0.18 million and a recovery of future income taxes in the sum of $0.16
million. The net effect was a provision for income taxes of $0.02 million.
Liquidity and Capital Resources
At March 31, 2006, the Company had working capital of $0.70 million (December
31, 2004 -$1.73 million). Cash and cash equivalents at March 31, 2006 amounted
to $0.63 million compared to cash and cash equivalents at December 31, 2005 of
$0.02 million.
Changes in future conditions could require material write-downs of the carrying
amounts of future expenditures. As at March 31, 2006, the Company had an excess
of current assets over current liabilities of $0.70 million and has recorded
losses and net cash outflows from operations for the past two years. The
Company was required to pay $1 million to keep its mineral property rights in
Angola in the near-term. These circumstances cast significant doubt as to the
ability of the Company to continue as a going concern. Management is currently
pursuing several financing alternatives to secure capital. It is not possible
to determine, with any certainty, the success or adequacy of these initiatives.
The financial statements of the Company have been prepared on the basis that the
Company will continue as a going concern which presumes that it will be able to
realize its assets and discharge its liabilities in the normal course of
business. The financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern. If
management is unsuccessful in securing capital, the Company's assets may not be
realized or its liabilities discharged at their carrying amounts and these
differences could be material.
Cash Flow Statements
Cash flow used in operating activities for the year ended March 31, 2006,
including changes in non-cash working capital of $0.73 million, totalled $1.01
million as compared to $1.93 million in the same period in 2005. In the three
months ended March 31, 2006 cash from investing activities was $1.62 million of
which $0.90 million (2005 - $0.53 million) was expended on exploration of
mineral properties incurred principally in Angola and Sierra Leone. During the
first three months of 2006 and 2005, the Company received $2.52 million and
$2.13 million respectively from the sale of 45,000 (2005 - 50,000 shares)
Newmont common shares.
Use of Financial Instruments
The Company has not entered into any specialized financial agreements to
minimize its investment risk, currency risk or commodity risk. There are no
off-balance sheet arrangements.
Changes in Accounting Policies
There were no change in accounting policies during the first quarter of 2006 and
2005.
Outstanding Share Data
As at May 12, 2006, the Company has 30,620,575 common shares in issued and
outstanding. Holders of common shares are entitled to one vote on any ballot at
meetings in respect of each common share held. The Company has 2,100,000 stock
options outstanding at a weighted average price of Cdn$0.33 together with
200,000 warrants at an exercise price of Cdn$0.38 for a vesting period of two
years pursuant to exploration agreements.
Transactions with Related Parties
Related party transactions relate primarily to the payment of fees under
contracts for services with companies in which a director is a shareholder and
director of the Company. The Company was charged a total of $0.14 million
during the first quarter of 2006 with respect to these services (2005 - $0.07
million). Included in accounts payable and accrued liabilities at March 31,
2006 is $0.31 million (2005 - $nil million) payable to these related parties for
such services.
The Company's primary legal counsel is with a firm in which a director of the
Company is a partner. The Company was charged $0.10 million during the first
quarter of 2006 (2005 - $nil million) for legal services provided by this firm.
Included in accounts payable and accrued liabilities as at March 31, 2006 is
$0.16 million (2005 - $nil) with respect to such services.
Selected Consolidated Annual Financial Information
Set forth below is certain financial data for the last three completed financial
years:
December 31,2005 December 31,2004 December 31,2003
$ $ $
Total revenue - - -
Basic and diluted (loss) earning per share (0.06) (0.07) 1.10
Total assets 6,334,596 9,296,704 39,712,942
(Loss) net income for the year (1,1612,359) (1,938,765) 30,908,193
Total long term financial liabilities - - -
Dividends declared - - 27,752,267
Quarterly Information
The following table summaries the results of the Company for each of the most
recent eight quarters:
March March June June Sept Sept Dec Dec
2006 2005 2005 2004 2005 2004 2005 2004
$ $ $ $ $ $ $ $
Revenues - - - - - - - -
Net profit/(loss)33,490 (529,462) (678,423) (1,868,233) (735,771) 562,407 331,297 126,053
Basic and diluted
(loss)/ earnings per
Common share 0.001 (0.018) (0.023) (0.065) (0.025) 0.020 0.011 0.004
Total assets 6,841,872 7,225,175 6,821,886 8,869,545 6,662,268 9,714,493 6,334,596 9,296,704
Number of common shares
outstanding 30,620,575 28,964,382 28,964,382 28,784,382 30,620,575 28,814,382 30,620,575 28,964,382
Regulatory, Environmental and Other Risk Factors
The Company intends to fulfil all statutory commitments on its current licences
over the next year and will apply for licence renewals in the normal course of
business.
The Company's operating income and cash flow are affected by changes in the U.S.
/Canadian dollar exchange rate together with movement in the local currencies in
Angola, Sierra Leone, Ghana, and Ireland, as a portion of the Company's costs
are incurred in these currencies.
The profitability of any mining operation will be significantly affected by
changes in the market price of commodities. Commodity prices fluctuate on a
daily basis and are affected by numerous factors such as world supply, Central
Bank selling, stability of exchange rates, forward sales and inflationary
forces, among other factors beyond Moydow's control.
Exploration companies are subject to various laws and regulations including but
not limited to environmental and, health and safety matters together with
political risks which are outside the Company's control. Moydow is committed to
a program of environmental protection at all of its projects and exploration
sites.
The financial statements of the Company have been prepared on the basis that the
Company will continue as a going concern which presumes that it will be able to
realize its assets and discharge its liabilities in the normal course of
business. The financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern. If
management is unsuccessful in securing capital, the Company's assets may not be
realized or its liabilities discharged at their carrying amounts and these
differences could be material.
Outlook
The Company will in the short term focus its efforts on adding value to our
diamond property in Angola and our bauxite property in Sierra Leone.
MOYDOW MINES INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(expressed in United States dollars, unless otherwise stated)
March 31, December 31
2006 2005
(unaudited) (unaudited)
Assets
Current assets
Cash and cash equivalents $628,521 $18,344
Newmont common shares (note 2) - 2,214,000
Accounts receivable and prepaid expenses 275,667 67,715
Current income taxes recoverable 19,821 19,821
Deposit Angolan state diamond mining company(note 3) 1,000,000 -
1,924,009 2,319,880
Mineral properties (Note 3) 4,895,759 3,992,612
Other assets 22,104 22,104
6,841,872 6,334,596
Liabilities
Current liabilities
Accounts payable and accrued liabilities 1,227,092 593,140
Future income taxes - 160,166
1,227,092 753,306
Shareholders' Equity
Capital stock (Note 4) 16,759,055 16,759,055
Contributed surplus 414,726 414,726
Deficit (11,559,001) (11,592,491)
5,614,780 5,581,290
6,841,872 6,334,596
Nature of operations and going concern (note 1)
MOYDOW MINES INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF EARNINGS
(expressed in United States dollars, unless otherwise stated)
For the three months ended March 31, 2006 2005
(unaudited) (unaudited)
Expenses
General and administrative expenses 246,880 263,297
Amortization of plant and equipment - 1,581
Foreign exchange (gain) loss 7,991 (9,958)
254,871 254,920
Other income and expenses
Interest income 4,686 3,478
Gain (loss )on Newmont common shares (note 2) 306,882 (285,670)
Dividend income 850 7,650
312,418 (274,542)
Net profit (loss) before income taxes 57,547 (529,462)
Income tax (provision) recovery
Current (184,223) -
Future 160,166 -
Total provision for income taxes (24,057) -
Net earnings (loss) for the period 33,490 (529,462)
Basic and diluted earnings (loss) per common share $0.001 $(0.018)
Weighted average number of common shares outstanding 30,620,575 28,964,382
Consolidated statements of deficit
Deficit, beginning of period $(11,592,491) $(9,980,132)
Net profit (loss )for the period 33,490 (529,462)
Deficit, end of period $(11,559,001) $(10,509,594)
MOYDOW MINES INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(expressed in United States dollars, unless otherwise stated)
For the three months ended March 31,(unaudited) 2006 2005
Cash provided by (used in)
Operating activities
Net earnings (loss) for the period $33,490 $(529,462)
Adjustments for non-cash items:
Amortization of capital assets - 1,581
(Gain) Loss on Newmont common shares (306,882) 285,670
Loss on other assets - 530
Future income taxes (160,166)
(433,558) (241,681)
Changes in non-cash working capital:
Accounts receivable and prepaid expenses (207,952) (147,128)
Accounts payable and accrued liabilities 633,952 (1,542,067)
Deposit (1,000,000) -
(574,000) (1,689,195)
(1,007,558) (1,930,876)
Investing activities
Proceeds from sale of Newmont shares 2,520,882 2,129,230
Exploration of mineral properties (903,147) (528,800)
1,617,735 1,600,430
Increase (decrease) in cash and cash equivalent 610,177 (330,446)
Cash and cash equivalents-Beginning of period 18,344 808,321
Cash and cash equivalents-End of period 628,521 477,875
MOYDOW MINES INTERNATIONAL INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(expressed in United States dollars, unless otherwise stated)
1) Nature of operations and going concern
Moydow Mines International Inc. ("Moydow" or the "Company") is an international
exploration company with primary interests in precious metals, diamonds and
industrial minerals. Moydow's common shares are listed on both the Toronto
Stock Exchange and the Alternative Investment Market of the London Stock
Exchange.
The Company is exploring its mineral properties and, as at March 31, 2006, had
not determined the existence of economically recoverable reserves. The
recoverability of the amounts shown for mineral properties is dependent upon the
existence of economically recoverable mineral reserves, the preservation of the
Company's interest in the underlying mineral claims and the ability to obtain
necessary financing, to obtain government approval and to attain profitable
production or, alternatively, upon the Company's ability to profitably dispose
of its interests.
Changes in future conditions could require material write-downs of the carrying
amounts of expenditures. As at March 31, 2006, the Company had an excess of
current assets over current liabilities of $881,140, however, the deposit of $1
million is only refundable in the event that the Company satisfies certain
commitments as described in note 3. The Company has also recorded net cash
outflows from operations for the past two years. These circumstances cast
significant doubt as to the ability of the Company to continue as a going
concern. Management is currently pursuing several financing alternatives to
secure capital. It is not possible to determine, with any certainty, the
success or adequacy of these initiatives.
The financial statements of the Company have been prepared on the basis that the
Company will continue as a going concern, which presumes that it will be able to
realize its assets and discharge its liabilities in the normal course of
business. The financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern. If
management is unsuccessful in securing capital, the Company's assets may not be
realized or its liabilities discharged at their carrying amounts and these
differences could be material.
These consolidated financial statements have been prepared in accordance with
Canadian generally accepted accounting principles. The consolidated financial
statements include the accounts of the Company, its subsidiaries and a
proportionate share of the Company's interests in joint ventures. Interests in
associated companies, which are not controlled but over which the Company has
the ability to exercise significant influence, are accounted for using the
equity method. All significant inter-company accounts and transactions have
been eliminated. In the opinion of management, all adjustments considered
necessary for fair presentation have been included in these financial
statements. Operating results for the periods ended March 31, 2006 are not
necessarily indicative of the results that may be expected for the full year
ended December 31, 2006. For further information, see the Company's
consolidated financial statements including the notes thereto included in the
Annual Report for the year ended December 31, 2004.
2) Newmont common shares
Gain (loss) on Newmont common shares comprises: 2006 2005
$ $
Gain (loss) on sale of 45,000 shares (2005 - 50,000 shares) 306,882 (91,270)
Write-down of remaining Newmont shares to market at March 31, - (194,400)
Gain (loss) on Newmont common shares for the three months to March 31, 306,882 (285,670)
The Company's investment in Newmont common shares is carried at the lower of
cost and market value. The market value of the Newmont common shares held at
March 31, 2006 was $nil (2005 - 95,000 Newmont common shares was $3,802,500).
3) Mineral properties
The Company, either directly or through certain joint ventures, has obligations
to expend various amounts on its mineral properties and projects in order to
keep its mineral property rights in good standing. All agreements are in the
normal course of business.
Mineral exploration properties in Africa and North America are recorded with
their carrying values as follows:
Angola Sierra Leone Ghana Total
$ $ $ $
Balance -December 31,2005 1,771,567 1,641,128 579,917 3,992,612
Costs -March 31,2006 462,364 280,640 160,143 903,147
Balance-March 31,2006 2,233,931 1,921,768 740,060 4,895,759
On January 14, 2006, Moydow paid $1,000,000 to the Angolan state diamond mining
company. In order for the deposit to be refunded to Moydow, Moydow must incur
expenditures of $1,000,000 within six months of making the deposit.
4) Capital stock
Authorized
Unlimited number of common shares
Issued
Number of $
shares
Balance - December 31, 2004 28,964,382 16,480,245
Issue of shares - July 19, 2005 60,000 10,348
Issue of shares for cash - September 30, 2005 1,596,193 268,462
Balance - March 31, 2006 and December 31, 2005 30,620,575 16,759,055
In 2005, the Company issued 60,000 shares in connection with the acquisition of
its interest in the Altius Baie d'Espoir property.
In 2004, the Company agreed to issue 150,000 shares in connection with the
acquisition of its interest in the Port Loko property.
5) Related party transactions
Related party transactions relate primarily to the payment of fees under
contracts for services with companies in which a Moydow Mines' director is a
shareholder and director. The Company was charged a total of $137,183 during
the quarter March 31, 2006 (2005 - $70,560) with respect to drilling and
administration services. Included in accounts payable and accrued liabilities
as at March 31, 2006 is $306,967 (December 31, 2005 - $nil) payable to these
related parties for such services.
The Company's primary legal counsel is a firm in which a director of the Company
is a partner. The Company was charged $101,843 during the quarter March 31,
2006 (2005 - $nil) for legal services provided by this firm. Included in
accounts payable and accrued liabilities as at March 31, 2006 is $158,896
(December 31, 2005 - $nil) with respect to such services.
These transactions are made in the normal course of business.
Corporate Information.
Directors and Officers
Noel P. Kiernan - Director, Chairman
Brian P. Kiernan - Director, President & CEO
Albert C. Gourley - Director
Richard J. Linnell - Director, Member of the Audit Committee
Michael E. Power - Director, Vice President & Secretary
J. Joseph Breen - COO
Rosemary G. O'Mongain - CFO
Toronto Office and Registered Office
12th Floor
20 Toronto Street
Toronto, Ontario
Canada, M5C 2B8
Tel: (416) 703 3751 Fax: (416) 367 3638
Dublin Office
74 Haddington Road
Dublin 4, Ireland
Tel: (353) 1 667 7611 Fax: (353) 1 667 7622
Accra Office
Shankill House
21, 5th Circular Road
East Cantonments
Accra, Ghana
Tel: (233) 21 772516 Fax: (233) 21 777247
Transfer Agent
Computershare Trust Company of Canada
100 University Avenue, 8th Floor
Toronto, Ontario
Canada, M5J 2YI
Exchange Listing
The Toronto Stock Exchange
Symbol: MOY
CUSIP: 62472V 100
Shares outstanding: 30,620,575
Shares fully diluted: 32,920,575
To contact the Company
In order to contact the company or to request to be added to our mailing list
please email info@moydow.com
website: www.moydow.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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