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DRN - Delrand Resources Limited - Unaudited group results for the three and
six months ended 30 June 2011
DELRAND RESOURCES LIMITED
(formerly BRC DiamondCore Ltd.)
(Incorporated in Canada)
(Corporation number 627115-4)
Share code: DRN & ISIN Number: CA2472671072
("Delrand" or "the Company")
UNAUDITED GROUP RESULTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2011
NOTICE TO READER
These interim condensed consolidated financial statements of Delrand
Resources Limited (the "Company") as at and for the three and six month
periods ended June 30, 2011 have been prepared by and are the responsibility
of the Company`s management. These interim condensed consolidated financial
statements have not been audited or reviewed by the Company`s auditors.
The accompanying notes are an integral part of these interim condensed
consolidated financial statements.
Condensed Consolidated Statements of Financial Position
(Expressed in Canadian dollars - unaudited)
Notes June 30, 2011 December 31, January 1,
2010 2010
$ $ $
Assets
Current Assets
Cash and cash
equivalents 339,952 126,931 664,495
Prepaid expenses and
other assets 34,410 21,713 163,175
Total Current Assets
374,362 148,644 827,670
Non-Current Assets
Property, plant and 4
equipment 640 4,100 141,794
Exploration and 5
evaluation 4,628,195 5,074,302 5,826,083
Total Non-Current 5,078,402
Assets 4,628,835 5,967,877
Total Assets 5,227,046
5,003,197 6,795,547
Liabilities and
Shareholders` Equity
Current Liabilities
Accounts payable and
accrued liabilities 594,645 834,176 1,027,172
Notes payable 7
- 400,493 377,884
Taxes payable
- 6,127 -
Due to related parties
49,614 106,029 -
Total Current 1,346,825
Liabilities 644,259 1,405,056
Non-current
Future tax liability
15,789 15,789 57,030
Total Liabilities 1,362,614
660,048 1,462,086
Shareholders` Equity
Share capital 8
116,283,812 115,457,876 115,457,876
Contributed surplus
7,812,242 7,812,242 7,774,233
Deficit
(119,752,905) (119,405,686) (117,898,648)
Total Shareholders` 3,864,432
Equity 4,343,149 5,333,461
Total Liabilities and 5,227,046
Shareholders` Equity 5,003,197 6,795,547
Common shares
Authorized Unlimited Unlimited Unlimited
Issued and outstanding
49,704,341 89,408,640 89,408,640
Condensed Consolidated Statements of Comprehensive Loss
(Expressed in Canadian dollars - unaudited)
Notes For the For the For the For the six
three three six month month period
month month period ended June 30,
period period ended 2010
ended June ended June June 30,
30, 2011 30, 2010 2011
$ $ $ $
Expenses
Consulting and 97,196 64,251 202,318 144,593
professional
fees
General and 75,004 34,220 145,414 106,556
administrative
Share-based 9 - - - 73,116
payment expense
Foreign exchange (2,756) 323 (513) 2,360
(gain) loss
Loss from (169,444) (98,794) (347,219) (326,625)
operations
Headline loss (169,444) (98,794) (347,219) (326,625)
per share
Loss for the (169,444) (98,794) (347,219) (326,625)
period
Comprehensive (169,444) (98,794) (347,219) (326,625)
loss for the
period
Loss per share, (0.00) (0.00) (0.00) (0.00)
basic and
diluted
Condensed Consolidated Statements of Changes in Equity
(Expressed in Canadian dollars - unaudited)
N Common shares Contribut Deficit Total Share-
o ed holder`s
t Surplus equity
e
s
Number of Amount
shares
$ $ $ $
Balance 115,457,876
at 89,408,640 7,774,233 (117,898,648) 5,333,461
January
1, 2010
Net
loss (326,625) (326,625)
for the
period
Share 9
based 95,189 95,189
compens
ation
Balance
at June 89,408,640 115,457,876 7,869,422 (118,225,273) 5,102,025
30,
2010
Net
loss (1,180,413) (1,180,413)
for the
period
Share
based (57,180) (57,180)
compens
ation
Balance at
December 89,408,640 115,457,876 7,812,242 (119,405,686) 3,864,432
31, 2010
Balance
at 89,408,640 115,457,876 7,812,242 (119,405,686) 3,864,432
January
1, 2011
Net
loss (347,219) (347,219)
for the
period
Share 9
based
compens
ation
Share
issue 10,000,000 825,936 825,936
Two to 8
one a (49,704,299
share )
consoli
dation
Balance
at June * 49,704,341 116,283,812 7,812,242 (119,752,905) 4,343,149
30,
2011
* 2 to 1 consolidation of shares was implemented June 2011 after the share
issue
Condensed Consolidated Statements of Cash Flows
(Expressed in Canadian dollars - unaudited)
Notes Three Three Six Six
months months months months
ended ended ended ended
June 30, June 30, June 30, June 30,
2011 2010 2011 2011
$ $ $ $
Cash flows from
operating activities
Net loss for the period
(169,444) (98,794) (347,219) (326,625)
Adjustments to reconcile
loss to net cash used in
operating activities
Share based payments 9
- - - 73,116
Accrued interest in
notes payable 3,069 - 8,000 -
Changes in non-cash
working capital
Prepaid expenses and
other current assets (24,133) 1,658 (12,697) 36,606
Taxes payable
(6,127) - (6,127) -
Accounts payable and
accrued liabilities (248,435) (27,339) (239,531) (146,073)
Net cash flows from
operating activities (445,070) (124,475) (597,574) (362,976)
Cash flows from
investing activities
Expenditures on
exploration and 326,508 (34,949) 145,233 (34,949)
evaluation
Funds received from Rio
Tinto 113,071 - 304,334 -
Net cash used in
investing activities 439,579 (34,949) 449,567 (34,949)
Cash flows from
financing activities
Issue of shares
825,936 - 825,936 -
Repayment of notes 7
payable (408,493) - (408,493) -
Due to related parties
(219,832) (35,583) (56,415) (259,373)
Net cash from financing
activities 197,611 (35,583) 361,028 (259,373)
Net increase in cash
during the period 192,120 (195,007) 213,021 (657,298)
Cash and cash
equivalents, beginning 147,832 202,204 126,931 664,495
of the period
Cash and cash
equivalents, end of the 339,952 7,197 339,952 7,197
period
Supplemental cash flow information (Note 12)
1 Corporate Information
The principal business of Delrand Resources Limited (the "Company") is the
acquisition and exploration of mineral properties in the Democratic Republic
of the Congo ("DRC"). In June 2011, the Company effected a change in the name
of the Company from BRC DiamandCore Ltd. to Delrand Resources Limited and a
consolidation of the outstanding common shares of the Company on a two to one
basis.
These interim condensed consolidated financial statements as at and for the
three and six month periods ended June 30, 2011 include the accounts of the
Company and of its wholly-owned subsidiaries incorporated in the DRC, BRC
DiamondCore Congo SPRL, and in South Africa, BRC Diamond South Africa
(Proprietary) Limited.
The Company is a publicly traded company whose outstanding common shares are
listed for trading on the Toronto Stock Exchange and the JSE Limited in
Johannesburg, South Africa. The head office of the Company is located at 1
First Canadian Place, 100 King St. West, Suite 707O, Toronto, Ontario, M5X
1E3, Canada.
2 Basis of Preparation
These interim condensed consolidated financial statements are prepared on a
going concern basis, which assumes that the Company will continue in
operation for a reasonable period of time and will be able to realize its
assets and discharge its liabilities in the normal course of operations. The
Company has not generated revenues from operations. The Company incurred a
net loss of $347,219 during the six months ended June 30, 2011 and, as of
that date, the Company`s deficit was $119,752,905. These conditions along
with other matters indicate the existence of material uncertainties that may
cast significant doubt about the Company`s ability to continue as a going
concern. As such, the Company`s ability to continue as a going concern
depends on its ability to successfully raise additional financing for
development of the mineral properties. Although the Company has been
successful in the past in obtaining financing and subsequently raised
financing, there is no assurance that it will be able to obtain adequate
financing in the future or that such financing will be available on
acceptable terms.
a) Statement of compliance
These interim condensed consolidated financial statements have been
prepared in accordance with International Accounting Standard ("IAS") 34
Interim Financial Reporting using accounting policies consistent with
International Financial Reporting Standards ("IFRS") issued by the
International Accounting Standards Board ("IASB").
The Company`s annual consolidated financial statements previously were
prepared in accordance with Canadian generally accepted accounting
principles (GAAP). Canadian GAAP differs from IFRS in some areas. In
preparing the IFRS statements, management amended certain accounting,
valuation, and consolidation methods previously applied under Canadian
GAAP.
The Company`s date of transition was January 1, 2010 (the "transition
date"). An explanation of how the transition of previously prepared
financial statements in accordance with Canadian GAAP to IFRS has
affected the reported financial position, financial performance and cash
flows of the Company is provided in Note 14. This note includes
reconciliations of equity and profit/loss for comparative periods and of
equity at the date of transition reported under Canadian GAAP to those
reported for those periods and at the date of transition under IFRS. The
2010 comparative figures have been restated to reflect the adjustments,
except as described in the accounting policies. These interim condensed
consolidated financial statements and comparative figures presented are
in accordance with IFRS and have not been audited.
The policies applied in these interim condensed consolidated financial
statements are presented in Note 3 and are based on IFRS expected to be
effective as of December 31, 2011. The date the Company`s Audit
Committee approved these financial statements was August 12, 2011.
2 Basis of measurement
These interim condensed consolidated financial statements have been
prepared under the historical cost convention, except for certain
financials assets which are presented at fair value, as explained in the
accounting policies set out in Note 3.
3 Summary of Significant Accounting Policies
The accounting policies set out below have been applied consistently to
all periods presented in these interim condensed consolidated financial
statements and in preparing the opening IFRS consolidated statements of
financial position at January 1, 2010 for the purposes of the transition
to IFRS, unless otherwise indicated. The exemptions taken in applying
IFRS for the first time are set out in Note 14. The accounting policies
have been applied consistently by all entities.
a) Basis of Consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when
the Company has the power, directly or indirectly, to govern the
financial and operating policies of an entity so as to obtain benefits
from its activities. This control is evidenced through owning more than
50% of the voting rights or currently exercisable potential voting
rights of a company`s share capital. The financial statements of
subsidiaries are included in the consolidated financial statements of
the Company from the date that control commences until the date that
control ceases. Consolidation accounting is applied for all of the
Company`s subsidiaries.
(ii) Transactions eliminated on consolidation
Inter-company balances, transactions, and any unrealized income and
expenses, are eliminated in preparing the consolidated financial
statements.
Unrealized losses are eliminated in the same way as unrealized gains,
but only to the extent that there is no evidence of impairment.
b) Use of Estimates and Judgments
The preparation of these interim condensed consolidated financial
statements in conformity with IFRS requires management to make
judgments, estimates 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.
In preparing these interim condensed consolidated financial statements,
the significant judgments made by management applying the Company`s
accounting policies and the key sources of estimation uncertainty are
expected to be the same as those to be applied in the first annual IFRS
financial statements. 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. Information about critical judgments in applying accounting
policies that have the most significant effect on the amounts recognized
in the interim condensed consolidated financial statements is included
in the following notes:
i) Provisions and contingencies
The amount recognized as provision, including legal, contractual,
constructive and other exposures or obligations, is the best estimate of the
consideration required to settle the related liability, including any related
interest charges, taking into account the risks and uncertainties surrounding
the obligation. In addition, contingencies will only be resolved when one or
more future events occur or fail to occur. Therefore assessment of
contingencies inherently involves the exercise of significant judgment and
estimates of the outcome of future events. The Company assesses its
liabilities and contingencies based upon the best information available,
relevant tax laws and other appropriate requirements.
(ii) Exploration and evaluation expenditure
The application of the Company`s accounting policy for exploration and
evaluation expenditure requires judgment in determining whether it is likely
that future economic benefits will flow to the Company, which may be based on
assumptions about future events or circumstances. Estimates and assumptions
made may change if new information becomes available. If, after the
expenditure is capitalized, information becomes available suggesting that the
recovery of the expenditure is unlikely, the amount capitalized is written
off in the statement of comprehensive loss during the period the new
information becomes available.
(iii) Impairment
Assets, including property, plant and equipment and exploration and
evaluation, are reviewed for impairment whenever events or changes in
circumstances indicate that their carrying amounts exceed their recoverable
amounts. The assessment of the fair value often requires estimates and
assumptions such as discount rates, exchange rates, commodity prices,
rehabilitation and restoration costs, future capital requirements and future
operating performance. Changes in such estimates could impact recoverable
values of these assets. Estimates are reviewed regularly by management.
iv) Income taxes
The Company is subject to income taxes in various jurisdictions and subject
to various rates and rules of taxation. Significant judgment is required in
determining the provision for income taxes. There are many transactions and
calculations undertaken during the ordinary course of business for which the
ultimate tax determination is uncertain. The Company recognizes liabilities
for anticipated tax audit issues based on the Company`s current understanding
of the tax law. Where the final tax outcome of these matters is different
from the amounts that were initially recorded, such differences will impact
the current and deferred tax provisions in the period in which such
determination is made.
In addition, the Company has recognized deferred tax assets relating to tax
losses carried forward to the extent there are sufficient taxable income
relating to the same taxation authority and the same subsidiary against which
the unused tax losses can be utilized. However, future realization of the tax
losses also depends on the ability of the entity to satisfy certain tests at
the time the losses are recouped, including current and future economic
conditions, production rates and production costs.
v) Share-based payment transactions
The Company measures the cost of equity-settled transactions with employees
by reference to the fair value of the equity instruments at the date at which
they are granted. Estimating fair value for share-based payment transactions
requires determining the most appropriate valuation model, which is dependent
on the terms and conditions of the grant. This estimate also requires
determining the most appropriate inputs to the valuation model including the
expected life of the share option, volatility and dividend yield and making
assumptions about them. The assumptions and models used for estimating fair
value for share-based payment transactions are disclosed in Note 9.
vi) Decommissioning and environmental provisions
The Company`s operations are subject to environmental regulations in the DRC.
Upon establishment of commercial viability of a site, the Company estimates
the cost to restore the site following the completion of commercial
activities and depletion of reserves. These future obligations are estimated
by taking into consideration closure plans, known environmental impacts, and
internal and external studies which estimate the activities and costs that
will be carried out to meet the decommissioning and environmental
obligations. Amounts recorded for decommissioning and environmental
provisions are based on estimates of decommissioning and environmental costs
which may not be incurred for several years or decades. The decommissioning
and environmental cost estimates could change due to amendments in laws and
regulations in the DRC. Additionally, actual estimated decommissioning and
reclamation costs may differ from those projected as a result of an increase
over time of actual remediation costs, a change in the timing for utilization
of reserves and the potential for increasingly stringent environmental
regulatory requirements.
c) Foreign Currency Translation
Functional and presentation currency
These interim condensed consolidated financial statements are presented
in Canadian dollars ("$"), which is the Company`s functional and
presentation currency.
Foreign currency transactions
The functional currency for each of the Company`s subsidiaries is the
currency of the primary economic environment in which the entity
operates. Transactions entered into by the Company`s subsidiaries in a
currency other than the currency of the primary economic environment in
which they operate (their "functional currency") are recorded at the
rates ruling when the transactions occur except depreciation and
amortization which are translated at the rates of exchange applicable to
the related assets, with any gains or losses recognized in the
consolidated statements of comprehensive loss. Foreign currency monetary
assets and liabilities are translated at current rates of exchange with
the resulting gain or losses recognized in the consolidated statements
of comprehensive loss. Exchange differences arising on the retranslation
of unsettled monetary assets and liabilities are recognized immediately
in profit or loss. Non-monetary assets and liabilities are translated
using the historical exchange rates. Non-monetary assets and liabilities
measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value is determined.
d) Cash
Cash and cash equivalents includes cash on hand, deposits held with
financial institutions and other short-term, highly liquid investments
with original maturities of three months or less that are readily
convertible to known amounts.
e) Financial Assets
Financial assets are classified as either financial assets at fair value
through profit or loss ("FVTPL"), loans and receivables, held to
maturity investments ("HTM"), or available for sale financial assets
("AFS"), as appropriate at initial recognition and, except in very
limited circumstances, the classification is not changed subsequent to
initial recognition. The classification is determined at initial
recognition and depends on the nature and purpose of the financial
asset. A financial asset is derecognized when contractual rights to the
asset`s cash flows expire or if substantially all the risks and rewards
of the asset are transferred.
i. Financial assets at FVTPL
Financial assets are classified as FVTPL when the financial asset is
held for trading or it is designated upon initial recognition as at
FVTPL. A financial asset is classified as held for trading if (1) it has
been acquired principally for the purpose of selling or repurchasing in
the near term; (2) it is part of an identified portfolio of financial
instruments that the Company manages and has an actual pattern of short
term profit taking; or (3) it is a derivative that is not designated and
effective as a hedging instrument. Financial assets at FVTPL are carried
in the consolidated statement of financial position at fair value with
changes in fair value recognized in profit or loss. Transaction costs
are expensed as incurred.
The Company has classified cash and cash equivalents as FVTPL.
Loans and receivables
Trade receivables, loans and other receivables that have fixed or
determinable payments that are not quoted in an active market are
classified as loans and receivable.
Loans and receivables are initially recognized at fair value plus
transaction costs that are directly attributable to their acquisition or
issue, and are subsequently carried at amortized cost less losses for
impairment. The impairment loss of receivables is based on a review of
all outstanding amounts at period end. Bad debts are written off during
the period in which they are identified. Amortized cost is calculated
taking into account any discount or premium on acquisition and includes
fees that are an integral part of the effective interest rate and
transaction costs. Gains and losses are recognized in the statements of
comprehensive loss when the loans and receivables are derecognized or
impaired, as well as through the amortization process.
HTM investments
HTM financial instruments are initially measured at fair value.
Subsequently, HTM financial assets are measured at amortized cost using
the effective interest rate method, less any impairment losses. The
Company did not classify any assets as HTM.
iii. AFS financial assets
Non-derivative financial assets not included in the above categories are
classified as AFS financial assets. They are carried at fair value with
changes in fair value generally recognized in other comprehensive loss
and accumulated in the AFS reserve. Impairment losses are recognized in
profit or loss. Purchases and sales of AFS financial assets are
recognized on settlement date with any change in fair value between
trade date and settlement date being recognized in the AFS reserve. On
sale, the cumulative gain or loss recognized in other comprehensive loss
is reclassified from the AFS reserve to profit or loss. The Company has
not designated any of its financial assets as AFS.
iv. Impairment of financial assets
The Company assesses at each reporting date whether a financial asset or
a group of financial assets is impaired. A financial asset or group of
financial assets is deemed to be impaired, if, and only if, there is
objective evidence of impairment as a result of one or more events that
has occurred after the initial recognition of the asset and that event
has an impact on the estimated future cash flows of the financial asset
or the group of financial assets that can be reliably estimated.
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 estimated future cash flows, discounted at the asset`s
original effective rate.
The carrying amount of all financial assets, excluding advances
receivables and balances due from related parties, is directly reduced
by the impairment loss. The carrying amount of trade receivables is
reduced through the use of an allowance account. Associated allowances
are written off when there is no realistic prospect of future recovery
and all collateral has been realized or has been transferred to the
Company. 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. A provision
for impairment is made in relation to advances receivable, and an
impairment loss is recognized in profit and loss when there is objective
evidence that the Company will not be able to collect all of the amounts
due under the original terms. The carrying amount of the receivable is
reduced through use of an allowance account.
With the exception of AFS equity instruments, if in a subsequent period
the amount of impairment loss decreases and the decrease relates to an
event occurring after the impairment was recognized, the previously
recognized impairment loss is reversed through profit or loss. On the
date of impairment reversal, the carrying amount of the financial asset
cannot exceed its amortized cost had the impairment not been recognized.
Reversal for AFS equity instruments are not recognized in profit or
loss.
Effective interest method
The effective interest method calculates the amortized cost of a
`financial instrument asset or liability and allocates 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 liability, or where appropriate, a shorter
period. Income is recognized on an effective interest basis for debt
instruments other than those financial assets classified as FVTPL.
f) Financial Liabilities
Financial liabilities are classified as FVTPL, or other financial
liabilities, as appropriate upon initial recognition. A financial
liability is derecognized when the obligation under the liability is
discharged, cancelled or expired.
i. Financial liabilities classified as other financial liabilities are
initially recognized at fair value less directly attributable
transaction costs. Subsequent to the initial recognition, other
financial liabilities are measured at amortized cost using the
effective interest method. The Company`s other financial
liabilities include accounts payables and accrued liabilities and
notes payable.
ii. Financial liabilities classified as FVTPL include financial
liabilities held for trading and financial liabilities designated
upon initial recognition as FVTPL. Financial liabilities are
classified as held-for-trading if they are acquired for the purpose
of selling in the near term. This category includes derivative
financial instruments (including separated embedded derivatives)
held for trading unless they are designated as effective hedging
instruments. Gains or losses on liabilities held for trading are
recognized in the consolidated statement of comprehensive loss. The
Company does not have any financial liabilities classified as
FVTPL.
g) Loss Per Share
Basic loss per share is computed by dividing the net loss applicable by
the weighted average number of common shares outstanding during the
reporting period. Diluted loss per share is computed by dividing the net
loss by the sum of the weighted average number of common shares issued
and outstanding during the reporting period and all additional common
shares for the assumed exercise of stock options and warrants
outstanding for the reporting period, if dilutive. The treasury method
stock method is used for the assumed proceeds upon the exercise of stock
options and warrants that are used to purchase common shares at the
average market price during the reporting period. As the Company is
incurring losses, basic and diluted loss per share are the same since
including the exercise of outstanding stock options and share purchase
warrants in the diluted loss per share calculation would be anti-
dilutive.
h) Property, Plant and Equipment ("PPE")
i)Recognition and measurement
Items of PPE are measured at cost less accumulated depreciation and
accumulated impairment losses. Cost includes expenditures that are
directly attributable to the acquisition of the asset. The cost of self-
constructed assets includes the cost of materials, directed labor and
any other cost directly attributable to bring the asset to the location
and condition necessary to be capable of operating in the manner
intended by the Company. Assets in the course of construction are
capitalized in the capital construction in progress category and
transferred to the appropriate category of PPE upon completion. When
components of an asset have different useful lives, depreciation is
calculated on each separate component.
ii. Subsequent costs
The cost of replacing part of an item of PPE is recognized in the
carrying amount of the item if it is probable that the future
economic benefits embodied within the part will flow to the Company
and its cost can be measured reliably. The carrying amount of the
replaced part is derecognized and included in net loss. If the
carrying amount of the replaced component is not known, it is
estimated based on the cost of the new component less estimated
depreciation. The costs of the day-to-day servicing of property,
plant and equipment are recognized in profit or loss as incurred.
iii. Depreciation
Depreciation is based on the cost of an asset less its residual
value. Significant components of individual assets are assessed to
determine whether a component has an estimated useful life that is
different from that of the remainder of that asset, in which case
that component is depreciated separately. Depreciation is
recognized in profit or loss on a straight line basis over the
estimated useful lives of each item or component of an item of PPE
as follows:
* Furniture and office equipment two to seven years
* Vehicles four years
* Computer equipment three years
* Exploration and mining assets two to four years
Depreciation methods, useful lives and residual values are reviewed
annually and adjusted, if appropriate. Depreciation commences when an
asset is available for use. Changes in estimates are accounted for
prospectively.
iv. Gains and losses
Gains and losses on disposal of an item of PPE are determined by
comparing the proceeds from disposal with the carrying amount of the
PPE, and are recognized net within other income/expenses in profit or
loss.
v. Repairs and maintenance
Repairs and maintenance costs are charged to expense as incurred,
except major inspections or overhauls that are performed at regular
intervals over the useful life of an asset is capitalized as part
of PPE.
vi. De-recognition
An item of PPE is derecognized 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 de-recognition of the assets
(calculated as the difference between the net disposal proceeds and
the carrying amount of the item) is included in net earnings (loss)
in the period the item is derecognized.
i) Exploration and Evaluation Assets
All direct costs related to exploration and evaluation of mineral
properties, net of incidental revenues, are capitalized under
exploration and evaluation assets. Exploration and evaluation
expenditures include such costs as acquisition of rights to explore;
sampling, trenching and surveying costs; costs related to topography,
geology, geochemistry and geophysical studies; drilling costs and costs
in relation to technical feasibility and commercial viability of
extracting a mineral resource.
A regular review of each property is undertaken to determine the
appropriateness of continuing to carry forward costs in relation to
exploration and evaluation of mineral properties. Should the carrying
value of the expenditure not yet amortized exceed its estimated
recoverable amount in any year, the excess is written off to the
consolidated statements of comprehensive loss.
j) Impairment of Non-financial Assets
The Company`s PPE is assessed for indication of impairment at each
consolidated statements of financial position date. Exploration and
evaluation assets are assessed for impairment when facts and
circumstances suggest that the carrying amount of an exploration and
evaluation asset may exceed its recoverable amount. Internal factors,
such as budgets and forecasts, as well as external factors, such as
expected future prices, costs and other market factors are also
monitored to determine if indications of impairment exist. If any
indication of impairment exists, an estimate of the asset`s recoverable
amount is calculated. The recoverable amount is determined as the higher
of the fair value less costs to sell for the asset and the asset`s value
in use. This is determined for an individual asset, unless the asset
does not generate cash inflows that are largely independent of those
from other assets or the Company`s assets. If this is the case, the
individual assets are grouped together into cash generating units
("CGU") for impairment purposes. Such CGUs represent the lowest level
for which there are separately identifiable cash inflows that are
largely independent of the cash flows from other assets.
If the carrying amount of the asset exceeds its recoverable amount, the
asset is impaired and an impairment loss is charged to the consolidated
statements of comprehensive loss so as to reduce the carrying amount to
its recoverable amount (i.e., the higher of fair value less cost to sell
and value in use). Fair value less cost to sell is the amount obtainable
from the sale of an asset or CGU in an arm`s length transaction between
knowledgeable, willing parties, less the costs of disposal. Value in use
is determined as the present value of the future cash flows expected to
be derived from an asset or CGU. Estimated future cash flows are
calculated using estimated future prices, mineral reserves and resources
and operating and capital costs. All assumptions used are those that an
independent market participant would consider appropriate. 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 for which estimates of
future cash flows have not been adjusted.
The Company has not recognized impairment of tangible assets during the
three and six month periods ended June 30, 2011 and June 30, 2010 (year
ended December 31, 2010 - $740,975).
k) Income Taxes
Income tax expense consists of current and deferred tax expense. Income
tax expense is recognized in profit and loss, except to the extent that
it relates to items recognized in other comprehensive income or directly
in equity. In this case, the tax is also recognized in other
comprehensive income or directly in equity.
Current income tax assets and liabilities for the current and prior
periods are measured at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws used to compute
current income tax assets and liabilities are measured at future
anticipated tax rates, which have been enacted or substantively enacted
at the reporting date. Current tax assets and current tax liabilities
are only offset if a legally enforceable right exists to set off the
amounts, and the Company intends to settle on a net basis, or to realize
the asset and settle the liability simultaneously.
Deferred taxation is provided on all qualifying temporary differences at
the reporting date between the tax basis of assets and liabilities and
their carrying amounts for financial reporting purposes. Deferred tax
assets are only recognized to the extent that it is probable that the
deductible temporary differences will reverse in the foreseeable future
and future taxable profit will be available against which the temporary
difference can be utilized.
Deferred tax liabilities and assets are not recognized for temporary
differences between the carrying amount and tax bases of investments in
controlled entities where the parent entity is able to control the
timing of the reversal of the temporary differences and it is probable
that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets and liabilities and when
the deferred tax balances relate to the same taxation authority.
l) Share-Based Payments
Equity-settled share-based payments for directors, officers and
employees are measured at fair value at the date of grant and recorded
as compensation expense in the financial statements. The fair value
determined at the grant date of the equity-settled share-based payments
is expensed on a straight-line basis over the vesting period based on
the Company`s estimate of shares that will eventually vest. The number
of forfeitures likely to occur is estimated on grant date. Any
consideration paid by the optionee on exercise of equity-settled share-
based payments is credited to share capital. Shares are issued from
treasury upon the exercise of equity-settled share-based instruments.
Compensation expense on stock options granted to non-employees is
measured at the earlier of the completion of performance and the date
the options are vested using the fair value method and is recorded as an
expense in the same period as if the Company had paid cash for the goods
or services received.
When the value of goods or services received in exchange for the share-
based payment cannot be reliably estimated, the fair value is measured
by use of a Black-Scholes valuation model. The expected life used in
the model is adjusted, based on management`s best estimate, for the
effects of non-transferability, exercise restrictions, and behavioural
considerations.
m) Provisions and Contingencies
Provisions are recognized when a legal or constructive obligation
exists, as a result of past events, and it is probable that an outflow
of resources that can be reliably estimated will be required to settle
the obligation. Where the effect is material, the provision is
discounted using an appropriate current market-based pre-tax discount
rate. The increase in the provision due to passage of time is recognized
as interest expense.
When a contingency substantiated by confirming events, can be reliably
measured and is likely to result in an economic outflow, a liability is
recognized as the best estimate required to settle the obligation. A
contingent liability is disclosed where the existence of an obligation
will only be confirmed by future events, or where the amount of a
present obligation cannot be measured reliably or will likely not result
in an economic outflow. Contingent assets are only disclosed when the
inflow of economic benefits is probable. When the economic benefit
becomes virtually certain, the asset is no longer contingent and is
recognized in the consolidated financial statements.
n) 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. Parties are also considered to be related if they
are subject to common control or common significant influence, 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. Related party
transactions that are in the normal course of business and have
commercial substance are measured at the exchange amount.
o) New Pronouncements Adopted
March 31, 2011 was the Company`s first reporting period under IFRS.
Accounting standards effective for periods beginning on January 1, 2011
have been adopted as part of the transition to IFRS.
p) Recent Pronouncements Issued
The Company has reviewed new and revised accounting pronouncements that
have been issued but are not yet effective and determined that the
following may have an impact on the Company:
IFRS 9 Financial instruments ("IFRS 9") was issued by the IASB on
November 12, 2009 and will replace IAS 39 Financial Instruments:
Recognition and Measurement ("IAS 39"). IFRS 9 replaces the multiple
rules in IAS 39 with a single approach to determine whether a financial
asset is measured at amortized cost or fair value and a new mixed
measurement model for debt instruments having only two categories:
amortized cost and fair value. The approach in IFRS 9 is based on how an
entity manages its financial instruments in the context of its business
model and the contractual cash flow characteristics of the financial
assets. The new standard also requires a single impairment method to be
used, replacing the multiple impairment methods in IAS 39. IFRS 9 is
effective for annual periods beginning on or after January 1, 2013. The
Company is currently evaluating the impact of IFRS 9 on its consolidated
financial statements.
A revised version of IAS 24 Related party disclosures ("IAS 24") was
issued by the IASB on November 4, 2009. IAS 24 requires entities to
disclose in their consolidated financial statements information about
transactions with related parties. Generally, two parties are related to
each other if one party controls, or significantly influences, the other
party. IAS 24 has simplified the definition of a related party and
removed certain of the disclosures required by the predecessor standard.
The revised standard is effective for annual periods beginning on or
after January 1, 2011. The adoption of this issuance did not have a
significant impact on the Company`s consolidated financial statements.
IFRS 10 Consolidated Financial Statements ("IFRS 10") establishes
principles for the presentation and preparation of consolidated
financial statements when an entity controls one or more other entities.
IFRS 10 supersedes IAS 27 "Consolidated and Separate Financial
Statements" and SIC-12 "Consolidated - Special Purpose Entities" and is
effective for annual periods beginning on or after January 1, 2013.
Earlier application is permitted. The Company is currently evaluating
the impact of this standard on its consolidated financial statements.
IFRS 11 Joint Arrangements ("IFRS 11") establishes principles for
financial reporting by parties to a joint arrangement. IFRS 11
supersedes the current IAS 31 "Interests in Joint Ventures" and SIC-13
"Jointly Controlled Entities - Non-Monetary Contributions by Venturers"
and is effective for annual periods beginning on or after January 1,
2013. Earlier application is permitted. The Company is currently
evaluating the impact of this standard on its consolidated financial
statements.
IFRS 12 Disclosure of Interests in Other Entities ("IFRS 12") applies to
entities that have an interest in a subsidiary, a joint arrangement, an
associate or an unconsolidated structured entity. IFRS 12 is effective
for annual periods beginning on or after January 1, 2013. Earlier
application is permitted. The Company is currently evaluating the impact
of this standard on its consolidated financial statements.
IFRS 13 Fair Value Measurements ("IFRS 13") defines fair value, sets out
in a single IFRS framework for measuring fair value and requires
disclosures about fair value measurements. IFRS 13 applies to IFRSs that
require or permit fair value measurements or disclosures about fair
value measurements (and measurements, such as fair value less costs to
sell, based on fair value or disclosures about those measurements),
except in specified circumstances. IFRS 13 is to be applied for annual
periods beginning on or after January 1, 2013. Earlier application is
permitted. The Company is currently evaluating the impact of these
standards on its consolidated financial statements.
IFRS 7 Financial instruments: disclosures ("IFRS 7") The Accounting
Standards Board ("AcSB") approved the incorporation of the IASB`s
amendments to IFRS 7 Financial Instruments: Disclosures and the related
amendment to IFRS 1 First-time Adoption of International Financial
Reporting Standards into Part I of the Handbook. These amendments were
made to Part I in January 2011 and are effective for annual periods
beginning on or after July 1, 2011. Earlier application is permitted.
The amendments relate to required disclosures for transfers of financial
assets to help users of the financial statements evaluate the risk
exposures relating to such transfers and the effect of those risks on an
entity`s financial position. The Company is currently evaluating the
impact of IFRS 7 on its consolidated financial statements.
An amendment to IAS 1, Presentation of financial statements was issued
by the IASB in June 2011. The amendment requires separate presentation
for items of other comprehensive income that would be reclassified to
profit or loss in the future, such as foreign currency differences on
disposal of a foreign operation, if certain conditions are met from
those that would never be reclassified to profit or loss. The effective
date is July 1, 2012 and earlier adoption is permitted. The Company is
currently evaluating the impact of this amendment on its consolidated
financial statements.
IAS 27, Separate financial statements ("IAS 27") was re-issued by the
IASB in May 2011 to only prescribe the accounting and disclosure
requirements for investments in subsidiaries, joint ventures and
associates when an entity prepares separate financial statements. The
consolidation guidance will now be included in IFRS 10. The amendments
to IAS 27 are effective for annual periods beginning on or after January
1, 2013. The Company is currently evaluating the impact of the
amendments on its consolidated financial statements.
IAS 28, Investments in associates and joint ventures ("IAS 28") was re-
issued by the IASB in May 2011. IAS 28 continues to prescribe the
accounting for investments in associates, but is now the only source of
guidance describing the application of the equity method. The amended
IAS 28 will be applied by all entities that have an ownership interest
with joint control of, or significant influence over, an investee. The
amendments to IAS 28 are effective for annual periods beginning on or
after January 1, 2013. The Company is currently evaluating the impact of
the amendments on its consolidated financial statements.
4 Property, Plant and Equipment
The Company`s property, plant and equipment are summarized as follows:
Notes Exploration Computer Vehicles Furniture Total
assets equipment and
office
equipment
$ $ $ $ $
Cost
Balance at 316,476
January 1, 28,659 254,436 18,106 617,677
2010
Additions
- - - - -
Disposals (207,371)
- (94,323) (1,255) (302,949)
Balance at 109,105
December 31, 28,659 160,113 16,851 314,728
2010
Additions
- - - - -
Disposals
- - - - -
Balance at
June 30, 109,105 28,659 160,113 16,851 314,728
2011
Accumulated
Depreciation
Balance at 216,384
January 1, 19,478 225,820 14,200 475,882
2010
Depreciation 34,398
for the year 6,985 28,616 2,686 72,685
Disposals (142,578)
(94,323) (1,040) (237,941)
Balance at 108,204
December 31, 26,463 160,113 15,846 310,626
2010
Depreciation
for the 901 1,621 - 940 3,462
period
Disposals
- - - - -
Balance at
June 30, 109,105 28,084 160,113 16,786 314,088
2011
5 Exploration and Evaluation Assets
The following table summarizes the Company`s tangible exploration and
evaluation expenditures with respect to its properties in the DRC:
Notes Tshikapa Lubao Tshikapa Northern Total
Project (Candore) DRC
Project
$ $ $ $ $
Cost
Balance per 5,826,083
IFRS as at 2,901,003 325,416 415,559 2,184,105
January 1,
2010
Additions
120,938 - - (131,744) (10,806)
Impairment
- (325,416) (415,559) - (740,975)
Balance as
at December 3,021,941 - - 2,052,361 5,074,302
31, 2010
Additions
89,527 - - (535,634) (446,107)
Balance as
at June 30, 3,111,468 - - 1,516,727 4,628,195
2011
There are $2,219 of intangible exploration and evaluation expenditures as at
January 1, 2010 (December 31, 2010: $2,219).
There have not been any additions or disposals since January 1, 2010.
a Tshikapa Project
The Tshikapa project is located in the south-western part of the
Kasai Occidental province of the DRC near the town of Tshikapa. The
Tshikapa project is located within the so-called Tshikapa triangle,
bordering the Kasai River in the east, the Loange River in the west
and the Angolan border in the south. The properties also lie within
the broader kimberlite emplacement corridor which extends from
known kimberlite pipes located in Angola. The Tshikapa diamond
field has been extensively mined by alluvial diamond companies and
small-scale miners, and it is estimated that it has produced over
100 million carats of diamonds since 1912. The Company has focused
its attention on the Tshikapa triangle through nine exploration
permits covering an area of 1,429 kmSquared. One of these permits
is held by the Company`s wholly-owned DRC subsidiary and the other
eight permits are controlled through option agreements with the
permit holders.
b Northern DRC Project
The Company`s northern DRC diamond project is located in Orientale
Province of the DRC and consists of 46 exploration permits, two of
which are held by the Company directly through its DRC subsidiary
and the balance of which are held through an option agreement with
the holder of the permits. Rio Tinto Mining and Exploration Limited
("Rio Tinto") is also party to this agreement. Under this
agreement, funding for the exploration of the areas covered by the
permits is provided by Rio Tinto. Funds received from Rio Tinto
under this agreement are deducted from exploration and evaluation
expenditures in the Company`s statement of financial position.
Assuming ongoing satisfactory exploration results, the Company will
acquire a 30% interest in the said permits subject to certain
conditions. The 44 exploration permits under option cover an area
of 7,313 kmSquared. The two additional exploration permits held by
the Company`s DRC subsidiary cover an area of 749 kmSquared
directly north of the optioned ground.
During the year ended December 31, 2010, the Company decided to
discontinue its Lubao and Candore projects which resulted in an
impairment loss of $740,975.
c In April 2011, the Company sold the containerized bulk sampling
plant that had been constructed for the alluvial deposits on the
Kwango River in southern DRC. The Kwango project had previously
been abandoned by the Company and the related licences relinquished
when it was concluded that the project would not be economically
viable. The gross proceeds from the sale of the plant were
US$575,000.
6 Segmented Reporting
The Company has one operating segment: the acquisition, exploration and
development of mineral properties located in the DRC. The operations of
the Company are located in two geographic locations, Canada and the DRC.
All of the items of property, plant and equipment and exploration and
evaluation assets in the Company`s statements of financial poition as at
June 30, 2011, December 31, 2010 and January 1, 2010 are located in the
DRC.
7 Notes Payable
In December 2010, the Company entered into two promissory notes payable
(the "Notes") in amounts of $100,000 and $300,000. The Notes bore simple
interest at a rate of 5% per annum and were unsecured and due on demand.
The fair value approximated the carrying value as at December 31, 2010.
The notes were repaid in May 2011 including accrued interest of $8,493.
8 Share Capital
a) Authorized
The Company`s authorized share capital consists of an unlimited number
of common shares with no par value.
The holders of the common shares are entitled to receive notice of and
to attend all meetings of the shareholders of the Company and shall have
one vote for each common share held at all meetings of the shareholders
of the Company. The holders of the common shares are entitled to (a)
receive any dividends as and when declared by the board of directors,
out of the assets of the Company properly applicable to the payment of
dividends, in such amount and in such form as the board of directors may
from time to time determine, and (b) receive the remaining property of
the Company in the event of any liquidation, dissolution or winding-up
of the Company.
On May 11, 2011 the Company closed a non-brokered private placement of
7,500,000 units of the Company at a price of $0.08 per unit for proceeds
of $600,000, and on May 27, 2011 the Company closed a non-brokered
private placement of 2,500,000 units of the Company at a price of $0.10
per unit for proceeds of $250,000. Each of the said units was comprised
of one common share of the Company and one warrant of the Company
entitling the holder to purchase one common share of the Company at a
price of $0.11 for a period of three years from the date of issuance of
the warrant. The purchasers of the units under the May 27, 2011 private
placement were directors and officers of the Company.
In June 2011 the Company consolidated its outstanding common shares on a
two to one basis. Immediately prior to the consolidation, the Company
had 99,408,640 common shares outstanding (December 31, 2010 -
89,408,640, January 1, 2010 - 89,408,640). Upon effecting the
consolidation, and as of June 30, 2011, the Company had 49,704,341
common shares outstanding.
b) Share purchase warrants
The Company`s outstanding warrants have been adjusted to reflect the two
to one share consolidation that occurred in June 2011 (see Note 8a). As
at June 30, 2011, the Company had outstanding warrants to purchase
15,000,000 (December 31, 2010 - 20,000,000)common shares of the Company.
Of the 15,000,000 warrants outstanding, 10,000,000 are exercisable at a
price of $0.132 per share until November 2013 and the remaining
5,000,000 are exercisable at a price of $0.22 per share until May 2014.
c) Loss per share
Loss per share was calculated on the basis of the weighted average
number of common shares outstanding for the period ended June 30, 2011,
amounting to 49,995,756 (June 30, 2010 - 89,408,640) common shares.
Diluted loss per share was calculated using the treasury stock method.
Total stock options as at June 30, 2011 of 1,040,000 (December 31, 2010
- 2,280,000) and warrants of 15,000,000 (December 31, 2010 - 20,000,000)
were excluded from the calculation of diluted loss per share as their
effect would have been anti-dilutive.
9 Share-Based Payments
The Company has a stock option plan under which non-transferable options
to purchase common shares of the Company may be granted by the Board of
Directors to any director, officer, employee or consultant of the
Company or any subsidiary of the Company. This stock option plan
contains provisions providing that the term of an option may not be
longer than five years and the exercise price of an option shall not be
lower than the last closing price of the Company`s shares on the Toronto
Stock Exchange prior to the date the stock option is granted. Unless the
Board at any time makes a specific determination otherwise, a stock
option and all rights to purchase Company shares pursuant thereto shall
expire and terminate immediately upon the optionee who holds such stock
option ceasing to be at least one of a director, officer or employee of
or consultant to the Company or a subsidiary of the Company, as the case
may be. One-quarter of the stock options granted pursuant to the stock
option plan vest immediately on their date of grant and successive
quarters of such stock options vest 6 months, 12 months and 18 months
after the grant date. Under the stock option plan, there are 910,000
additional options that may be issued.
The Company`s outstanding stock options have been adjusted to reflect
the two to one share consolidation that was implemented by the Company
in June 2011. As at June 30, 2011, the Company had outstanding under the
stock option plan stock options to acquire 1,040,000 (December 31, 2010
- 2,280,000) common shares of the Company at a weighted-average exercise
price of $4.59 (December 31, 2010 - $2.42) per share.
The following tables summarize information about stock options:
For the six months ended June 30, 2011:
Exer- Opening During the Closing Weig Vested Un
cise Balance Period Balance hted & ve
Price aver Exercis st
Range age able ed
($) rema
inin
g
cont
ract
ual
life
(yea
rs)
Gra Exerci Expire For
nte sed d fei
d ted
800,000 - - - - 800,000 2.16 800,000 -
2.10 -
5.00
100,000 - - -
5.20 - - (100,000) - - -
7.50
240,000 - - - - 240,000 0.90 240,000 -
7.52 -
16.00
1,140,000 - - -
(100,000) - 1,040,000 1,040,000
Weighte
d 2.42 - - 7.50 - 4.59 4.59 -
Average
Exercis
e Price
($)**
** The weighted-average exercise price opening balance at December
31, 2010 is not reflective of the two to one consolidation of shares
For the year ended December 31, 2010:
Exerci Opening During the Closin Weighte Vested & Un
se Balance Period g d Exercisab ve
Price Balanc average le st
Range e remaini ed
($) ng
contrac
tual
life
(years)
G Exe Expired Forfeit
r rci ed
a sed
n
t
e
d
1.05 - 2,261,400 1,600,000 2.66 1,600,000 -
2.50 - - 466,400 195,000
2.60 - 200,000 200,000 0.49 200,000 -
3.75 - - - -
3.76 - 480,000 - 480,000 1.39 480,000 -
8.00 - - -
2,941,400
- - 466,400 195,000 2,280,000 2,280,000 -
Weight 2.42
ed 2.34 - - 1.76 1.05 2.42 - -
Averag
e
Exerci
se
Price
($)
For the six months ended June 30, 2010:
Exercise Opening During the Closing Weight Vested & Unv
Price Balance Period Balance ed Exercisab est
Range averag le ed
($) e
remain
ing
contra
ctual
life
(years
)
Gr Ex Expired
an er
te ci
d se
d
2,261,400 2,020,000 2.10 2,020,000 -
1.05 - - - 241,400
2.50
200,000 200,000 1.00 200,000 -
2.60 - - - -
3.75
480,000 - 480,000 0.41 480,000 -
3.76 - - -
8.00
2,941,400 -
- - 241,400 2,700,000 3.51 2,700,000
Weighted -
Average 2.34 - - 2.47 2.33 2.33
Exercise
Price
($)
The fair value at grant date is determined using a Black-Scholes option
pricing model that takes into account the exercise price, the term of
the option, the impact of dilution, the share price at grant date and
expected price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option.
The expected price volatility is based on the historic volatility (based
on the remaining life of the options), adjusted for any expected changes
to future volatility due to publicly available information.
During the three and six month periods ended June 30, 2011, the Company
recognized in the statement of comprehensive loss as an expense $nil
(three and six months ended June 30, 2010 $nil and $73,116 respectively)
representing the fair value at the date of grant of stock options
previously granted to employees, directors and officers under the
Company`s Stock Option Plan. The weighted average fair value of stock
options issued was estimated at $1.87 per share option at the grant date
using the Black-Scholes option-pricing model. In addition, an amount of
$nil for the six month period ended June 30, 2011 (year ended December
31, 2010 - $8,893) related to stock options issued to employees of the
Company`s subsidiary in the DRC was capitalized to exploration and
evaluation assets.
These amounts were credited accordingly to contributed surplus in the
consolidated statements of financial position.
Replacement options
In connection with the acquisition by the Company of all of the
outstanding shares of Diamond Core Resources Limited ("Diamond Core") on
February 11, 2008, 617,710 (the "Replacement Options") stock options
were issued by the Company to employees of Diamond Core to substitute
15,133,190 stock options in Diamond Core. Diamond Core was subsequently
disposed of by the Company. As at June 30, 2011, there were 70,752
Replacement Options outstanding (December 31, 2010 - 141,503).
10 Related Party Transactions
a) Key Management Remuneration
The Company`s related parties include key management. Key management
includes executive directors and non-executive directors. The remuneration
of the key management of the Company as defined above, during the three and
six months ended June 30, 2011 and 2010 was as follows:
Three months ended Six months ended
June 30, June 30, June 30, June 30, 2010
2011 2010 2011
$ $ $ $
Salaries 46,630 91,693 155,846
134,375
46,630 91,693 134,375 155,846
b) Other Related Parties
During the three and six month periods ended June 30, 2011, legal expenses of
$37,163 and $37,163 (three and six month periods ended June 30, 2010 - $nil
and $nil), incurred in connection with general corporate matters, were paid
to a law firm of which a director of the Company is a partner . As at June
30, 2011, $37,163 (December 31, 2010 - $nil) owing to this legal firm was
included in accounts payable.
As at June 30, 2011, an amount of $16,667 was owed to one director of the
Company representing consulting fees (December 31, 2010 - $102,311). During
the three and six month periods ended June 30, 2011, consulting fees of
$25,000 and $50,000, respectively were incurred to the one director (three
and six month periods ended June 30, 2010 - $58,330 and $83,333 to two
directors).
As at June 30, 2011, an amount of $16,667 (December 31, 2010 - $nil) in the
form of advances of short term loans to the Company was due to a company
owned by a director of the Company.
As at June 30, 2011, an amount of $16,281 (December 31, 2010 - $3,719) was
owed to Banro Corporation ("Banro"). Banro owns 17,716,994 common shares of
the Company, representing a 35.65% interest in the Company. During the year
ended December 31, 2010, a drill rig was sold to Banro by the Company for
gross proceeds of $154,964.
On May 27, 2011 the Company closed a non-brokered private placement of
2,500,000 units of the Company at a price of $0.10 per unit for proceeds of
$250,000. The purchasers of the units under this private placement were
directors and officers of the Company (see Note 8a).
All amounts due to related parties are unsecured, non-interest bearing and
due on demand. All transactions are in the normal course of operations and
are measured at the exchange value.
Financial risk management objectives and policies
11 Fair value of financial assets and liabilities
a) The consolidated statements of financial position carrying amounts for
cash and cash equivalents, prepaid expenses and other assets, accounts
payable and accrued liabilities and notes payable approximate fair value
due to their short-term nature. Due to the use of subjective judgments
and uncertainties in the determination of fair values these values
should not be interpreted as being realizable in an immediate settlement
of the financial instruments.
The following presents the fair value and carrying value of the Company`s
financial instruments:
Classification Measurement 30-Jun- 31-Dec-
11 10
$ $
Financial assets
Cash and cash Held-for- Fair Value 339,952 126,931
equivalents Trading
Prepaid expenses Loans and Amortized
and other assets receivables cost
34,410 21,713
Financial
liabilities
Accounts payable
and accrued
liabilities Other Amortized 594,645 834,176
liabilities cost
Notes payable Other Amortized 400,493
liabilities cost -
Taxes payable Other Amortized 6,127
liabilities cost -
Due to related Other Amortized 49,614 106,029
parties liabilities cost
Fair value hierarchy
The following provides a description of financial instruments that are
measured subsequent to initial recognition at fair value, grouped into Levels
1 to 3 based on the degree to which the fair value is observable:
* Level 1 fair value measurements are those derived from quoted prices
(unadjusted) in active markets for identical assets or liabilities;
* Level 2 fair value measurements are those derived from inputs other than
quoted prices included within Level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices); and
* Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
There were no transfers between Level 1 and 2 during the reporting period.
The fair values of financial assets and liabilities carried at amortized cost
are approximated by their carrying values. Cash is ranked Level 1 as the
market value is readily observable. The carrying value of cash approximates
fair value as maturities are less than three months. Notes payable is ranked
level 2 as it is based on similar loans in the market.
b) Risk Management Policies
The Company is sensitive to changes in commodity prices and foreign-
exchange. The Company`s Board of Directors has overall responsibility
for the establishment and oversight of the Company`s risk management
framework. Although the Company has the ability to address its price-
related exposures through the use of options, futures and forward
contacts, it does not generally enter into such arrangements.
c) Foreign Currency Risk
Foreign currency risk is the risk that a variation in exchange rates
between the Canadian dollar and United States dollar or other foreign
currencies will affect the Company`s operations and financial results. A
portion of the Company`s transactions are denominated in United States
dollars, Congolese francs and South African rand. The Company is also
exposed to the impact of currency fluctuations on its monetary assets
and liabilities. The Company`s functional currency is the Canadian
dollar. The majority of major expenditures are transacted in US dollars.
The Company maintains the majority of its cash in Canadian dollars but
it does hold balances in US dollars. Significant foreign exchange gains
or losses are reflected as a separate component of the consolidated
statement of comprehensive loss. The Company does not use derivative
instruments to reduce its exposure to foreign currency risk.
d) Credit Risk
Financial instruments which are potentially subject to credit risk for
the Company consist primarily of cash. Cash is maintained with several
financial institutions of reputable credit in Canada, the DRC and South
Africa and may be redeemed upon demand. It is therefore the Company`s
opinion that such credit risk is subject to normal industry risks and is
considered minimal.
e) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its
financial obligations as they become due. The Company attempts to ensure
that there is sufficient cash to meet its liabilities when they are due
and manages this risk by regularly evaluating its liquid financial
resources to fund current and long-term obligations and to meet its
capital commitments in a cost-effective manner. The key to success in
managing liquidity is the degree of certainty in the cash flow
projections. If future cash flows are fairly uncertain, the liquidity
risk increases. The Company`s liquidity requirements are met through a
variety of sources, including cash, existing credit facilities and
equity capital markets. In light of market conditions, the Company
initiated a series of measures to bring its spending in line with the
projected cash flows from its operations and available project specific
facilities in order to preserve its financial position and maintain its
liquidity position.
f) Mineral Property Risk
The Company`s operations in the DRC are exposed to various levels of
political risk and uncertainties, including political and economic
instability, government regulations relating to exploration and mining,
military repression and civil disorder, all or any of which may have a
material adverse impact on the Company`s activities or may result in
impairment in or loss of part or all of the Company`s assets.
g) Market Risk
Market risk is the potential for financial loss from adverse changes in
underlying market factors, including foreign-exchange rates, commodity
prices, interest rates and stock based compensation costs. The Company
manages the market risk associated with commodity prices by establishing
and monitoring parameters that limit the types and degree of market risk
that may be undertaken.
h) Interest rate risk
Interest rate risk is the potential impact on any Company earnings due
to changes in bank lending rates and short term deposit rates. The
Company is not exposed to significant interest rate risk other than cash
flow interest rate risk on its cash. The Company does not use derivative
instruments to reduce its exposure to interest rate risk. A fluctuation
of interest rates of 1% would not affect significantly the fair value of
cash.
i) Title risk
Title to mineral properties involves certain inherent risks due to the
difficulties of determining the validity of certain claims as well as
the potential for problems arising from the frequently ambiguous
conveyancing history characteristic of many mining properties. Although
the Company has investigated title to all of its mineral properties for
which it holds concessions or other mineral licenses, the Company cannot
give any assurance that title to such properties will not be challenged
or impugned and cannot be certain that it will have valid title to its
mineral properties. The Company relies on title opinions by legal
counsel who base such opinions on the laws of countries in which the
Company operates.
j) Country risk
The DRC is a developing country and as such, the Company`s exploration
projects in the DRC could be adversely affected by uncertain political
or economic environments, war, civil or other disturbances, and a
changing fiscal regime and by DRC`s underdeveloped industrial and
economic infrastructure.
The Company`s operations in the DRC may be effected by economic
pressures on the DRC. Any changes to regulations or shifts in political
attitudes are beyond the control of the Company and may adversely affect
its business. Operations may be affected in varying degrees by factors
such as DRC government regulations with respect to foreign currency
conversion, production, price controls, export controls, income taxes or
reinvestment credits, expropriation of property, environmental
legislation, land use, water use and mine safety.
There can be no assurance that policies towards foreign investment and
profit repatriation will continue or that a change in economic
conditions will not result in a change in the policies of the DRC
government or the imposition of more stringent foreign investment
restrictions. Such changes cannot be accurately predicted.
K Capital Management
The Company manages its cash, common shares, warrants and stock options
as capital. The Company`s main objectives when managing its capital are:
to maintain a flexible capital structure which optimizes the cost of
capital at acceptable risk while providing an appropriate return to its
shareholders;
- to maintain a strong capital base so as to maintain investor,
creditor and market confidence and to sustain future development of
the business;
- to safeguard the Company`s ability to obtain financing; and
- to maintain financial flexibility in order to have access to
capital in the event of future acquisitions.
The Company manages its capital structure and makes adjustments to it in
accordance with the objectives stated above, as well as responds to changes
in economic conditions and the risk characteristics of the underlying assets.
There were no significant changes to the Company`s approach to capital
management during the period ended June 30, 2011.
Neither the Company nor any of its subsidiaries are subject to externally
imposed capital requirements.
June 30, 2011 December 31, 2010
$ $
Cash and cash 339,952 126,931
equivalents
Share capital 116,283,812 115,457,876
Deficit (119,752,905) (119,405,686)
12. Supplemental cash flow information
During the periods indicated the Company undertook the following significant
non-cash transactions:
Three months Six months ended
ended
Note June 30, June June June 30,
2011 30, 30, 2010
2010 2011
$ $ $ $
Depreciation included in 5 55,447
exploration and - 27,014 2,289
evaluation assets
Stock-based compensation 9 57,568
included in exploration - 57,568 -
and evaluation assets
Interest paid -
- - -
Taxes paid -
6,127 - 6,127
13. Commitments and Contingencies
The Company is committed to the payment of the surface fees and taxes. For
the year ended December 31, 2011, these fees and taxes are estimated to be
$127,981 (US$ 132,000) compared to $109,409 (US$ 110,000) incurred in the
year ended December 31, 2010. The surface fees and taxes are required to be
paid annually under the DRC Mining Code in order to keep exploration permits
in good standing.
Six of the exploration permits comprising part of the Company`s Tshikapa
project in the DRC are held through an option agreement with Acacia SPRL.
Acacia SPRL has advised the Company of its wish to modify the option
agreement. The Company continues its discussions with Acacia SPRL and is
optimistic of reaching an agreement that is satisfactory for both parties.
In addition to the above matters, the Company and its subsidiaries are also
subject to routine legal proceedings and tax audits. The Company does not
believe that the outcome of any of these matters, individually or in
aggregate, would have a material adverse effect on its consolidated losses,
cash flow or financial position.
Labour disputes
The Company is in dispute with two of its previous directors and officers.
One of the individuals had applied in 2008 for a summary judgment against the
Company in the Witwatersrand Local Division of the High Court of South Africa
in respect of a dispute relating to a settlement agreement pertaining to his
departure. The application for summary judgment was dismissed and the
Company was granted leave to defend the claim. This individual has not taken
further steps to progress that matter. However, in October 2010, almost two
years after the original claim, the same former director and officer
instituted fresh proceedings against the Company. He has repeated the claim
made previously, but this time in a summons lodged before the North Gauteng
High Court in South Africa. This former director and officer is claiming he
is owed payment of 1.2 million South African rand plus interest. The other
individual has referred two disputes to the Commission for Conciliation
Mediation and Arbitration in Johannesburg, South Africa and an action to the
High Court in that same jurisdiction. He elected to withdraw an application
for summary judgment. The Company is defending all these actions.
14 First Time Adoption of International Financial Reporting Standards
IFRS 1, First Time Adoption of International Financial Reporting Standards,
requires that comparative financial information be provided. As a result, the
first date at which the Company has applied IFRS was January 1, 2010. IFRS 1
requires first-time adopters to retrospectively apply all effective IFRS
standards as of the reporting date, which for the Company will be December
31, 2011. However, it also provides for certain optional exemptions and
certain mandatory exceptions for first-time IFRS adoption. Prior to
transition to IFRS, the Company prepared its financial statement in
accordance with Canadian GAAP.
In preparing the Company`s opening IFRS consolidated statements of financial
position, the Company has adjusted amounts reported previously in the
financial statements prepared in accordance with previous Canadian GAAP. The
IFRS 1 applicable exemptions and exceptions applied in the conversion from
Canadian GAAP to IFRS are as follows:
a) Share-based payment transactions
The Company has elected not to retrospectively apply IFRS 2 to
equity instruments that were granted and that vest before the
transition date. As a result of applying this exemption, the
Company has applied the provision of IFRS 2 to all outstanding
equity instruments that were unvested prior to the date of
transition to IFRS.
b) Deemed Cost of Exploration and Evaluation Assets
The Company has elected not to retrospectively apply IFRS 36 to the
previous impairments that have been recorded by the Company. Per
IFRS 1, the Company has taken an election to deem all exploration
and evaluation assets at cost.
c) Estimates
The estimates previously made by the Company under Canadian GAAP
were not revised for the application of IFRS except where necessary
to reflect any difference in accounting policy or where there was
objective evidence that those estimates were in error. As a
result, the Company has not used hindsight to create or revise
estimates.
IFRS employs a conceptual framework that is similar to Canadian GAAP. However
significant differences exist in certain matters of recognition, measurement
and disclosure. While the adoption has not changed the Company`s actual cash
flows, it has resulted in changes to the Company`s consolidated statement of
financial position and statement comprehensive loss. The statements of
comprehensive loss have been changed to comply with IAS 1 Presentation of
Financial Statements. The Canadian GAAP consolidated balance sheets as at
January 1, 2010 and December 31, 2010, the consolidated statements of
operations and other comprehensive loss for the three and six month periods
ended June 30, 2010 as well as the consolidated statement of cash flows for
the three and six month periods June 30, 2010 have been reconciled to IFRS,
with a summary of the most significant changes in share-based payments as
follows:
a) Share Based Payments
Under IFRS 2 Share Based Payments, each tranche of an award with
different graded vesting is accounted for as a separate award and
the resulting fair value is amortized over the vesting period of
the respective tranches. Under Canadian GAAP, the Company was
accounting for these as a single award. In addition, under IFRS 2,
the Company is required to estimate the number of forfeitures
likely to occur on grant date and reflect this in the share-based
payment expense revising for actual experiences in subsequent
periods. Under Canadian GAAP, forfeitures were recognized as they
occurred.
The impact of adjustments relates to share based payments on the
Company`s consolidated statement of financial position is as
follows:
The Canadian GAAP consolidated balance sheet as at January 1, 2010 has been
reconciled to IFRS as follows:
January 1, 2010
Notes Canadian GAAP Effect of IFRS
Transition
to IFRS
$ $ $
Assets
Current Assets
Cash and cash equivalents
664,495 - 664,495
Prepaid expenses and
other assets 163,175 - 163,175
Total Current Assets
827,670 - 827,670
Non-Current Assets
Capital assets
141,794 - 141,794
Mineral properties and
deferred exploration 5,808,835 17,248 5,826,083
expenditures
Total Non-Current Assets
5,950,629 17,248 5,967,877
Total Assets
6,778,299 17,248 6,795,547
Liabilities and
Shareholders` Equity
Current Liabilities
Accounts payable and
accrued liabilities 1,027,172 - 1,027,172
Accrued liabilities
377,884 - 377,884
Total Current Liabilities
1,405,056 - 1,405,056
Non-current
Future tax liability
57,030 - 57,030
Shareholders` Equity
Share capital
115,457,876 - 115,457,876
Contributed surplus
7,700,518 73,715 7,774,233
Deficit
(117,842,181) (56,467) (117,898,648)
Total Shareholders`
Equity 5,316,213 17,248 5,333,461
Total Liabilities and
Shareholders` Equity 6,778,299 17,248 6,795,547
The Canadian GAAP consolidated balance sheet as at June 30, 2010 has been
reconciled to IFRS as follows:
June 30, 2010
Notes Canadian GAAP Effect IFRS
of
Transiti
on to
IFRS
$ $ $
Assets
Current Assets
Cash
7,197 - 7,197
Prepaid expenses and other
assets 126,569 - 126,569
Total Current Assets
133,766 - 133,766
Non-Current Assets
Property, plant and
equipment 86,347 - 86,347
Mineral properties and
deferred exploration 5,939,291 (739) 5,938,552
expenditures
Total Non-Current Assets
6,025,638 (739) 6,024,899
Total Assets
6,159,404 (739) 6,158,665
Liabilities and
Shareholders` Equity
Current Liabilities
Bank indebtedness
7,686 - 7,686
Accounts payable and
accrued liabilities 873,413 - 873,413
Due to related parties
118,511 - 118,511
Total Current Liabilities
999,610 - 999,610
Non-current
Future tax liability
57,030 - 57,030
Shareholders` Equity
Capital stock
115,457,876 - 115,457,876
Contributed surplus
7,872,578 (3,156) 7,869,422
Deficit
(118,227,690) 2,417 (118,225,273)
Total Shareholders` Equity
5,102,764 (739) 5,102,025
Total Liabilities and
Shareholders` Equity 6,159,404 (739) 6,158,665
The Canadian GAAP consolidated balance sheet as at December 31, 2010 has been
reconciled to IFRS as follows:
December 31, 2010
Notes Canadian GAAP Effect of IFRS
Transition
to IFRS
$ $ $
Assets
Current Assets
Cash
126,931 - 126,931
Prepaids expenses and
other current assets 21,713 - 21,713
Total Current Assets
148,644 - 148,644
Non-Current Assets
Capital assets
4,100 - 4,100
Mineral properties and
deferred exploration 5,075,041 (739) 5,074,302
expenditures
Total Non-Current Assets
5,079,141 (739) 5,078,402
Total Assets
5,227,785 (739) 5,227,046
Liabilities and
Shareholders` Equity
Current Liabilities
Accounts payable and
accrued liabilities 834,176 - 834,176
Note payable
400,493 - 400,493
Taxes payable
6,127 - 6,127
Due to related parties
106,029 - 106,029
Total Current Liabilities
1,346,825 - 1,346,825
Non-current
Future income tax
liabilities 15,789 - 15,789
Shareholders` Equity
Capital stock
115,457,876 - 115,457,876
Contributed surplus
7,815,398 (3,156) 7,812,242
Deficit
(119,408,103) 2,417 (119,405,686)
Total Shareholders` Equity
3,865,171 (739) 3,864,432
Total Liabilities and
Shareholders` Equity 5,227,785 (739) 5,227,046
The Canadian GAAP consolidated statements of operations and other
comprehensive loss for the three and six month periods ended June 30, 2010
have been reconciled to IFRS as follows:
Three Months Ended June 30, 2010
Notes Canadian GAAP Effect of IFRS
$ Transition $
to IFRS
$
Expenses
Professional fees and
consulting fees 64,251 - 64,251
General and administrative
34,220 - 34,220
Share based payments
- (58,884) (58,884)
Foreign exchange (gain)
loss 323 - 323
Loss from operations (58,884)
(98,794) (39,910)
Loss for the period
(98,794) - (39,910)
Comprehensive loss for the
period (98,794) - (39,910)
Loss per share, basic and 0.00 0.00
diluted -
Six Months Ended June 30, 2010
Notes Canadian Effect of IFRS
GAAP Transition $
$ to IFRS
$
Expenses
Professional fees and
consulting fees 144,593 - 144,593
General and administrative
106,556 - 106,556
Share based payments
73,116 (58,884) 14,232
Foreign exchange (gain)
loss 2,360 - 2,360
Loss from operations (58,884)
(326,625) (267,741)
Loss for the period
(326,625) - (267,741)
Comprehensive loss for the
period (326,625) - (267,741)
Loss per share, basic and 0.00 0.00
diluted -
The Canadian GAAP consolidated statements of operations and other
comprehensive loss for the year ended December 31, 2010 have been reconciled
to IFRS as follows:
Year Ended December 31, 2010
Notes Canadian Effect of IFRS
GAAP Transition $
$ to IFRS
$
Expenses
Consulting, management and
professional fees 447,319 - 447,319
General and administrative
209,778 - 209,778
Share based payments
88,000 (58,884) 29,116
Foreign exchange (loss)
gain unrealized 3,356 - 3,356
Impairment of mineral
properties and deferred 740,975 - 740,975
exploration expenditures
Bad debt expense
105,009 - 105,009
Loss from operations (58,884)
(1,594,437) (1,535,553)
Income tax recovery
28,515 - 28,515
Loss for the period
(1,565,922) - (1,507,038)
Comprehensive loss for the
period (1,565,922) - (1,507,038)
Loss per share, basic and
diluted (0.02) - (0.02)
The Canadian GAAP reconciliation to IFRS of the consolidated statements of
cash flows for the three and six month periods June 30, 2010 is as follows:
Three months ended June 30,
2010
Notes Canadian Effect IFRS
GAAP of $
$ Transiti
on to
IFRS
$
Cash flows from operating
activities
Net loss for the period
(98,794) 58,884 (39,910)
Adjustments to reconcile loss to
net cash used in operating
activities
Share based payments
- (58,884) (58,884)
Changes in non-cash working
capital
Prepaid expenses and other assets
1,658 - 1,658
Accounts payable and accrued
liabilities (27,339) - (27,339)
Net cash flows from operating
activities (124,475) - (25,681)
Cash flows from investing
activities
Deferred Exploration expenditures
(34,949) - (34,949)
Net cash used in investing
activities (34,949) - (34,949)
Cash flows from financing
activities
Due to related parties
(35,583) - (35,583)
Net cash (used in) / from
financing activities (35,583) - (35,583)
Net increase (decrease) in cash
during the period (195,007) - (96,213)
Cash, beginning of the period
202,204 - 664,495
Cash, end of the period
7,197 - 568,282
Six months ended June 30, 2010
Notes Canadian Effect IFRS
GAAP of $
$ Transiti
on to
IFRS
$
Cash flows from operating
activities
Net loss for the period
(385,509) 58,884 (326,625)
Adjustments to reconcile loss to
net cash used in operating
activities
Share based payments
132,000 (58,884) 73,116
(253,509) - (253,509)
Changes in non-cash working
capital -
Prepaid expenses and other assets
36,606 - 36,606
Accounts payable and accrued
liabilities (146,073) - (146,073)
Net cash flows from operating
activities (362,976) - (362,976)
Cash flows from investing
activities
Deferred Exploration expenditures
(34,949) - (34,949)
Net cash used in investing
activities (34,949) - (34,949)
Cash flows from financing
activities
Due to related parties
(259,373) - (259,373)
Net cash (used in) / from
financing activities (259,373) - (259,373)
Net increase (decrease) in cash
during the period (657,298) - (657,298)
Cash, beginning of the period
664,495 - 664,495
Cash, end of the period
7,197 - 7,197
The Canadian GAAP reconciliation to IFRS of the consolidated statement of
cash flows for the year ended December 31, 2010 is as follows:
Year ended December 31, 2010
Notes Canadian Effect IFRS
GAAP of $
$ Transiti
on to
IFRS
$
Cash flows from operating
activities
Net loss for the period
(1,565,922) 58,884 (1,507,038)
Adjustments to reconcile
loss to net cash used in
operating activities
Impairment of properties
740,975 - 740,975
Share based payments
88,000 (58,884) 29,116
Accrued interest expense
493 - 493
Bad debt expense
105,009 - 105,009
Provision for taxes
(28,515) - (28,515)
Changes in non-cash working
capital -
Prepaid expenses and other
current assets 36,453 - 36,453
Accounts payables and
accrued liabilities (192,996) - (192,996)
Taxes payable
(6,598) - (6,598)
Net cash flows from
operating activities (823,101) - (823,101)
Cash flows from investing
activities
Proceeds from disposal of
capital asset 64,794 - 64,794
Expenditures on exploration
and evaluation (338,757) - (338,757)
Funds received from Rio
Tinto 431,355 - 431,355
Net cash used in investing
activities 157,392 - 157,392
Cash flows from financing
activities
Due to related parties
(271,855) - (271,855)
Notes payable
400,000 - 400,000
Net cash (used in) / from
financing activities 128,145 - 128,145
Effect of foreign exchange
on cash held in foreign - -
currency
Net increase (decrease) in
cash during the period (537,564) - (537,564)
Cash, beginning of the
period 664,495 - 664,495
Cash, end of the period
126,931 - 126,931
The Canadian GAAP reconciliation to IFRS of the consolidated statement of
changes in equity as at January 1, 2010 is as follows:
January 1, 2010
Notes Canadian GAAP Effect of IFRS
$ Transition $
to IFRS
$
Common Shares
Amount 115,457,876 - $115,457,876
Contributed 7,774,233
Surplus 7,700,518 73,715
Deficit (117,898,648)
(117,842,181) (56,467)
Total
Shareholder`s 5,316,213 17,248 5,333,461
Equity
The Canadian GAAP reconciliation to IFRS of the consolidated statement of
changes in equity for the six months ended June 30, 2010 is as follows:
June 30, 2010
Notes Canadian GAAP Effect of IFRS
$ Transition $
to IFRS
$
Common Shares 115,457,876
Amount - $115,457,876
Contributed 7,869,422
Surplus 7,872,578 (3,156)
Deficit (118,225,273)
(118,227,690) 2,417
Total 5,102,025
Shareholder`s 5,102,764 (739)
Equity
The Canadian GAAP reconciliation to IFRS of the consolidated statement of
changes in equity for the year ended December 31, 2010 is as follows:
December 31, 2010
Notes Canadian GAAP Effect of IFRS
$ Transition $
to IFRS
$
Common Shares 115,457,876
Amount - $115,457,876
Contributed 7,812,242
Surplus 7,815,398 (3,156)
Deficit (119,405,686)
(119,408,103) 2,417
Total 3,864,432
Shareholder`s 3,865,171 (739)
Equity
Johannesburg
18 August 2011
Sponsor
Arcay Moela Sponsors (Proprietary) Limited
Date: 18/08/2011 17:44:00 Supplied by www.sharenet.co.za
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